The birth of a child is undeniably among the most exciting – and frightening – lifetime events. From the moment you become a parent, your priorities often change. Your most important priority becomes protecting and providing for your child. That often prompts some important changes in your life. The Bellevue estate planning attorneys at Legacy Estate Planning, LLC explain why protecting and providing for a child typically requires changes to an existing estate plan.
Why Your Last Will and Testament May Not Be Enough Now
Your Last Will and Testament can accomplish the distribution of your entire estate; however, you may decide a Will is no longer enough to protect and provide for your child after you become a parent. To begin with, your minor children cannot inherit directly from your estate. Therefore, assets gifted to a minor in a Will must be managed by an adult until the child reaches the age of majority. The problem, however, is that you lose the ability to decide who that adult is if you rely on your Will to pass down assets to your minor children. This is the primary reason why parents of minor children choose to establish a trust in addition to their Will. Nevertheless, you want to make sure that you have taken the opportunity to nominate a Guardian for your children in your Will as that is the only official opportunity you will have to do so. A Guardian is the person you would want to take care of your children in the event something happened to you and a court was forced to appoint someone.
What Is a Trust and Why Might I Need One?
At its most basic, a trust is a relationship whereby property is held by one party for the benefit of another. A trust is created by a Settlor, also referred to as a Grantor or Maker, who transfers property to a Trustee. The Trustee, who is appointed by the Settlor, holds that property for the trust’s beneficiaries. All trusts fit into one of two categories – testamentary or living (inter vivos) trusts. Testamentary trusts are typically activated by a provision in the Settlor’s Last Will and Testament and, therefore, do not become active during the lifetime of the Settlor. Conversely, a living trust, activates during the Settlor’s lifetime.
A trust can provide several benefits to new parents. As the Settlor of the trust, you appoint the Trustee, and any successor Trustees, allowing you to decide who will protect and manage the inheritance you leave your child. In addition, a trust lets you stagger the inheritance you leave your children instead of giving them a lump sum. You can also decide when they receive those distributions and how much will be distributed each time. No matter how mature your child may be, handing an 18-year-old a large lump sum inheritance is rarely a wise idea. Instead, you may wish to direct the trust to distribute that inheritance in increasingly valuable disbursements over the course of several years to allow your child an opportunity to learn to handle his/her finances. Finally, unlike a Will, a trust can also help you plan for the possibility of your own incapacity. Whereas the terms of a Will only apply upon the death of the Testator, a trust can cover incapacity as well. This allows you to make certain that someone of your choosing takes over control of your assets in the event of your incapacity instead of leaving it up to a judge. This further allows you to make certain your children continue to benefit from the assets held in the trust until they are old enough to take care of themselves.
Contact Bellevue Estate Planning Attorneys
If you have additional questions or concerns regarding how to protect and provide for your child within your estate plan, or if you need to update your existing plan after becoming a parent, contact the experienced Bellevue estate planning attorneys at Legacy Estate Planning, LLC by calling (425) 455-6788 to schedule an appointment.