When most people think about planning their estate, they focus on the ultimate distribution of their accumulated assets. This is a worthy goal within the estate planning process, but it is certainly not the only reason to undertake this important planning step. For New Jersey parents with small children, a primary estate planning focus should be on ensuring that the well being of those children are supported in the event of the death of the parents.
No one wants to consider leaving behind children who are unable to care for themselves. However, we are unable to predict when our time may come, and many families are subjected to random acts that lead to sudden and tragic shifts in the family’s structure. The best way to ensure that young children are properly cared for in the event of such a tragedy is to take a proactive approach to the matter.
Many parents establish a trust that would serve to provide financial support to the individual(s) entrusted with caring for their children in the event of a loss. Such a trust can be funded with a wide range of assets, or parents can elect to purchase life insurance and have the trust assume “ownership” of the policy. By placing wealth into a trust, parents can take steps to ease the burden that a guardian would assume if a child or children were suddenly placed in that person’s care.
In structuring the trust, parents have a number of options. They can set the trust up in such a way as to give the guardians the ability to make changes or access funds as needed. For other families, having an attorney handle the tasks associated with trust administration is a better fit. Once a child reaches adulthood, the manner in which the trust was set up will dictate how he or she will inherit any remaining assets.
When considering how to best protect one’s children, trusts offer a solid estate planning solution. For New Jersey parents who have young children and are interested in learning more, a consultation with an estate planning attorney can be very informative. When it comes to planning for the care of children who are left without one or both parents, this is an area of estate planning that will hopefully never be called into action.
Source: thespectrum.com, “Estate planning important when children, grandchildren are involved“, Scott Halvorsen, Sept. 27, 2015