Estate Planning for the Young Family
by Ryan Beadle
A recent survey indicated that about 55% of adult Americans do not have a will. There may be many reasons for this, but a few of the most popular from the survey were:
1. People don’t believe they have enough wealth to be concerned about planning an estate (24%);
2. People don’t want to contemplate their own mortality (10%);
3. People don’t know who to talk to about wills (9%).
Generally, most believe that estate planning is for two groups: seniors and the wealthy.
It is understandable that death is a gloomy subject. But estate planning is definitely not just for seniors, and it is not just for the super-rich in terms of dollars and cents. There is real value in knowing that your children will be cared for if you can’t. The young, especially with young children, should have just as much incentive, if not more, to plan their estates as anyone else.
In the context of a young family, a will is indispensible in order to accomplish two objectives. First, a parent, through the will, should nominate a guardian, or a line of succession of guardians, in the event the children need one. The alternative to a parent nominating a guardian through a will is for the court to decide who should be guardian—greatly elevating the chances of a family fight over the issue.
Second, a will should ensure that a child younger than 18 does not directly inherit property. If a child is the beneficiary of an estate, and the child directly receives property in excess of $1,500 (each state has its own amount, and that happens to be North Carolina’s amount), the court may appoint a guardian to handle the money for the child until the child turns 18. Guardianships for finances require court oversight, which dissipates the child’s property. Also, at age 18, the child will own the property outright, at a time when the child may not be responsible enough to wisely control even a small amount of property. One sentence in a will can prevent the need for a guardianship for the child’s finances—a sentence that says that any amount given to a child beneficiary may be held in a custodial or trust account for the benefit of the child.
Tags: Ryan Beadle