There's A Way To Provide, It's A Will
You've probably heard the saying "where there's a will, there's a way." Well, that couldn't be more true than when it comes to estate planning. In my previous articles, I've discussed the importance of estate planning, how to get started with your estate plan, and life changes that would cause you to review your estate plan. This article in particular deals with why parents need estate planning.
Congratulations! You are a parent. Whether you are expecting your first child or already have four children, now is the time to get a will. A will is a legal instrument that allows a person to decide what happens to his property at the time of his death.
Imagine for a moment that your spouse dies without a will, leaving you to raise two small children with only your salary and the proceeds of an inadequate life insurance policy. Your spouse owned the house before you got married. So what happens? In North Carolina, the surviving spouse and the children each own one-third of the real property. Can you sell the house and move closer to your family? Can you use the insurance money to buy your son a new car when he turns 16? Good questions – the answers depend upon your particular situation.
What if something were to happen to both of you? Who would raise your children? Who would manage the money for your children? Couples with young children who fail to make an estate plan have chosen to have a court decide who will raise their children. When you have not made an estate plan, North Carolina law provides one for you.
Often, parents of young children will establish a trust under their will which takes effect only if both parents are not living. The purpose of this trust is to have the couple's assets held in trust for their minor children until the children are old enough to manage the money for themselves. The eventual distribution of principal from this trust can be made immediately available upon the children obtaining the age of majority (18), or principal can be gradually distributed over a period of years, such as 1/3 at age 25, 1/3 at age 30 and the remaining balance at age 35.
Many people fail to make an estate plan because they don't want to discuss death, but you need to initiate the discussion. Generally, you should discuss things like who is going to act as executor of the estate, whom you would select as guardian for your children, and what the financial arrangements for the children's care would be.
There are plenty of helpful resources available to get you started. Don't procrastinate. These are important choices and your family will have to live with them.
Stella Knight is an attorney licensed in North Carolina and Florida, with a major area of her law practice emphasizing estate planning, probate, trusts, wealth preservation and elder law. The information contained in this article is of a general nature and does not constitute legal advice. If you have questions, consult with a qualified attorney.