I often speak to groups on the topic of estate planning. (If you want me to speak to your group, please contact us!) When I do, I always talk about how best to protect kids in the event the worst happens and the parents both die. You see, if children are too young or too immature to do something sensible with an inheritance, I usually recommend that the inheritance should be held in trust.
Inevitably, someone will say, “I named my parents as the beneficiaries on all my accounts. They will take care of my children if something happens to me. Is that okay?” My answer: NO! That is NOT okay! Here are some of the many reasons why:
Invitation to Sue
First, if the children are under the age of 18, a court will determine who will become the legal guardian of those children. If mom and dad have named someone in a Last Will, that person will almost always get the job. But if mom and dad haven’t written a Last Will, they are inviting every aunt, uncle, or third cousin once removed to sue to try to get custody. Because if that distant relative can somehow convince the judge that he is the best guardian, he will get access to at least a chunk of mom and dad’s inheritance. (Very often, the kids will inherit at least some of mom and dad’s assets, and the guardian will get to be in control of that money.)
So, maybe the judge will send the children to grandma and grandpa, but maybe not. Maybe the judge will send them to live with Count Olaf. Why leave it up to a judge you’ve probably never met, when you can simply do an estate plan? (Already convinced you need to talk to me, schedule online now!)
Follow the Money
Okay, let’s assume that the kids and the money end up with grandma and grandpa, as planned. Will grandma and grandpa will manage their new-found wealth sensibly and in the best interests of the children? Remember, mom and dad left the money directly to grandma and grandpa. Yes, we all know they are supposed to save it for the children, but they are under absolutely no obligation to do so. Have you ever heard of Sudden Wealth Syndrome?
But let’s assume that grandma and grandpa do manage the money for the kids – maybe they set aside college savings, or spend it on counseling and therapy for the kids. This are going well — until something happens to grandma and grandpa. (How old did you say they are?) When grandma and grandpa die, still legal owning mom and dad’s inheritance, where will the money go? Often, the money ends up going to grandma and grandpa’s other children – the aunts and uncles of the orphaned kids. Do you really think the aunts and uncles are going to continue managing the money as grandma and grandpa (and mom and dad) intended? In most families, it just isn’t likely.
Problem Solved
The solution to both of these problems is simple – you need quality estate planning prepared by someone who knows what they are doing. We can help make sure your children are actually protected in the event of the worst. So what are you waiting for? Get scheduled for a free consultation right now! And while you are waiting for your appointment, find out what your estate plan will cost.
