One of the most important responsibilities any parent has to their children is to plan for unexpected tragedies. Among the worst things that could happen, perhaps few are more confusing and devastating than the parent’s untimely death.
While there are legal systems, such as family courts, that handle such situations, it is still important to plan for such incidents so that you can rest assured that your kids will go to the guardian you choose, in addition to how the money they inherit is used.
In this article, we are going to talk about parental estate planning as it relates to inheritances and trusts in the tragic event that you and your partner pass away.
Is a will enough?
Most people think that having a will is sufficient to pass guardianship in the event of a tragedy, but this document is only a means to transfer money and property. It has limits as to the extent to which it can specify how these properties and assets are used.
In most cases, a trust is a more reliable way to handle all of this. A trust can limit your assigned guardian’s usage of your assets in certain ways, like only allowing for certain parts of it to be spent on education. In essence, it allows parents who have passed on to have a modicum of control over how their children are raised even when they are gone.
Trusts can also ensure that the beneficiaries of an inheritance spend that money wisely. A good example is if the child is still underage and has just received a vast sum of money. How can you ensure that this money will be responsibly spent by a child?
It is especially useful for protecting people with special needs
While there are many programs both from the government and from outside of it that help people with special needs, most parents feel the necessity to go the extra mile and prepare for this situation using a Supplemental Needs Trust. A lot of these programs, especially those from the government, consider only individuals with $2000 or less in assets as eligible for support.
This regulation can cause the beneficiary’s inheritance to run out far more quickly than their parents might intend. A Supplemental Needs Trust, however, only gives supplemental support to these government programs, allowing the beneficiary to still qualify for them.
In doing so, a parent can help lengthen the duration over which the inheritance can last, which can certainly ease their worries.
There are financial benefits as well
Trusts allow titled assets, such as homes and cars, to be transferred without going through the complicated probate process often involved in wills. There are also significant tax benefits to be had.
You can also give someone Durable Power of Attorney (DPA) over your assets, to be managed and controlled through a trust, in the event of your figurative or literal absence (such as traveling off-grid or falling into a coma). The terms of this DPA can be as strict or as loose as you like. It can be as simple as paying your bills or as complicated as signing contracts in your name.
Nobody wants to experience a tragedy, but such events do happen. It is important to be prepared and have a plan in place to protect your children and loved ones, especially in this particularly difficult time in their lives. Not only will it help you and your family have some peace of mind, but it can also help the future guardians of your children as well.
If you’re looking for a family lawyer in New Jersey to handle your estate, send us a message at Bruno and Ferraro: Counselors at Law. We have the expertise and experience needed to handle the sensitive field of estate law.