If you just started laughing or rolling your eyes thinking of how you would have mishandled that amount of money fresh out of high school, then keep reading. While it seems a scenario that no parent in their right mind would knowingly prefer, I regularly see parents either having no estate plan or unknowingly having estate plans where this could happen. How do you ask? By not having a living trust or a testamentary trust.
Without one of these estate planning tools in place, and in the unfortunate event where both parents die, all of the parents’ assets will pass directly to the children (or upon their 18th birthday if they are minors). With most parents each carrying life insurance policies in excess of $200,000, having equity in their home, automobiles and other assets, you can see how this One Million Dollar scenario could actually happen. Or, are you a divorced or single parent with minor children? Your ex or the child’s other parent will most likely be given control over the assets your minor children receive if you do not have a living trust or testamentary trust in place.
Fortunately, well-drafted living trust or testamentary trust allows you to dictate how your assets are distributed and used for the benefit of your children well beyond their 18th birthday. A properly drafted estate plan will allow you options such as quantified distributions to your children upon their life achievements like graduating from college, getting married, or buying a home. Alternatively, you may elect to distribute your assets based on your children’s age (ie. 25% at age 30, 25% at age 35, and the remaining balance at age 40). In addition to these benefits, living trust or testamentary trust can protect your beneficiaries from creditors, has taxation benefits, and can even protect your children from themselves via a drug-free provision.
Now, there are more steps involved than just creating a living trust or testamentary trust. Non-probate assets such as life insurance policies, retirement accounts, and bank accounts will need to be tied to the living trust or testamentary trust you create. This step is done directly with the insurance company or respective financial institution by naming the trust (or trustee) as the alternate beneficiary after your spouse. Failing to do this step can still cause those non-probate assets to pass directly to your children, or whoever is named the beneficiary.
Just as every person is unique, an estate plan needs to be crafted to address a person’s unique variables such as age, income, marital status, health issues, goals, etc. When I create an estate plan, I do so only after getting to know my client to ensure that I know all the variables, can appropriately address those variables, and can better protect their children’s inheritances from being squandered. If you are a parent and do not have an estate plan, or your estate plan does not utilize a living trust or testamentary trust, please contact Rollins Law Group or call me at 317-558-9677 to set up a free consultation. I would be happy to go over your estate planning options and explain the difference between a living trust and a testamentary trust. Please click on this link (Estate Planning) to learn more about estate planning offered by Rollins Law Group.
For More Information about Specialized Driving Privileges Check out the recommended blogs below
Petitioning the court for Specialized Driving Privileges
Our previous posts dealt with the evolution from hardship licenses to Specialized Driving Privileges “SDP” and SDP eligibility. This post will deal specifically with the petition for SDP. Indiana Code Section 9-30-16-4(b) specifies the requirements for a petition filed under this law. The SDP petition must: Be Verified by the petitioner; Include the petitioner’s age,…
Do you qualify for Specialized Driving Privileges?
Our previous post discussed what Specialized Driving Privileges or “SDP” are. This post will discuss the qualifications and eligibility of a person petitioning for SDP. Before January 2015, a person with a suspended license had to petition the court for a hardship license. Hardship licenses were difficult to obtain and were often denied. Indiana has…
What are Specialized Driving Privileges?
A suspended license can be an impossible obstacle for a person trying to get their life back on track. For someone without easy access to public transportation, mundane daily responsibilities can become stressful ordeals. Indiana legislators have worked to relieve this burden on persons with suspended licenses and offer new provisions for a person seeking…