They say that there are two certainties in life, and the vast majority of people make the appropriate preparations before the April 15th tax deadline. Strangely enough, most of the same individuals do not take any steps to prepare for the other one.
Surveys that are conducted to gauge the estate planning preparedness of American adults find that less than 30 percent of people that are younger than 55 have estate plans in place. Yes, the odds are in your favor if you are in this group, but people pass away before their time every day.
The most disturbing thing about the lack of preparedness is the fact that almost all of the parents of dependent children are going to be in this age group. As soon as you have someone relying on you, estate planning becomes an absolute must.
Estate Planning for Minor Children
When you develop an estate plan as a parent, you should designate a guardian in a simple will. The probate court would be involved if a guardianship is necessary, but your choice will be honored if there are no extenuating circumstances with regard to the nominee’s qualifications.
From a financial perspective, children cannot handle assets, so you have to take this into account when you are planning your estate. If you have a living trust, you would act as the trustee while you are living, and you would name a successor to administer the trust after your passing.
This trustee would manage the assets on behalf of the children if you pass away while they are still minors. With regard to the funding, you can make the trust the beneficiary of a life insurance policy, and term life insurance is affordable for relatively young adults.
Another possibility is a testamentary trust, which is a trust that is contained within a will. It would be created by the executor in the event of your passing, and the trustee would manage the assets on behalf of the minor beneficiaries.
A custodial account is an account that can be established under the Uniform Gifts to Minors Act or the Uniform Transfers to Minors Act. With these accounts, an adult custodian that you name would handle the resources for a minor child.
Incapacity Planning
Your estate plan should address possible incapacity. This is common among elders, and younger people can become unable to communicate due to injuries sustained accidents or devastating illnesses.
From a financial perspective, if you have a living trust, you can empower the successor trustee to fill the role in the event of your incapacity. For property that is not held by a trust, you can name a representative in a durable power of attorney for property.
The “durable” designation is key, because this type of power of attorney will remain in effect if you become incapacitated.
Medical matters should be addressed as well, and this is done through the execution of advance directives for health care. You can use a living will to record your life support preferences, and you can add comfort care medication and organ and tissue donation choices.
To account for medical situations that are not related to life-support, you can name a representative in a durable power of attorney for health care. You should add a HIPAA release to give doctors the freedom to share information about your condition with your representative.
Speaking of the HIPAA release, the Health Insurance Portability and Accountability Act privacy protections extend to young adults as soon as they reach the age of majority.
With this in mind, you should encourage your young adult children to sign releases to give you access to their medical information.
Schedule a Consultation Today!
As you can see, there are many things to take into consideration, and there are different approaches that can be taken. Personalized attention is key, and this is what you will receive when you choose our firm.
If you are ready to get started, you can schedule an appointment at the Burbank, CA estate planning office of the Oakley Law Group if you call us at (818) 937-2335. Please use our Contact page if you would prefer to send us a message.
