Estate Planning is Important!!

Well, it has certainly been a long time since I posted on this blog.  I have been posting on my business facebook page (https://www.facebook.com/pages/Law-Offices-of-Judith-R-Pike/118159531528358?ref=br_tf) and between that and all the things that life tosses ones way, this blog became relegated to the back burner.  But now I am going to try to revive it, and hope you will find the new posts as helpful as those which were posted in the past.

Today's topic is estate planning.  I came across a survey performed by Lexis Nexis in 2011, and wish to re-post some portions of the report here, because I think the points it makes are important.

Survey Finds Most Americans Recognize the Importance of a Will or Estate Planning, Yet Few Have Necessary Documents in Place

Results Show Less Than Forty Percent of Parents with Minor Children Have Wills

July 19, 2011 — NEW YORK - A new national survey commissioned on behalf of LexisNexis®, finds the majority of Americans (60 percent) believe that all adults should have a will or estate planning documents in place, yet only 44 percent report that they currently have any such documents. In stark contrast, more than one third (36 percent) of Americans with minor children do not believe that wills or estate plans are among the most important documents to have on hand. Rather, adults with minors in the household rank birth certificates (76 percent) and titles/deeds for property and vehicles (70 percent) as the most important. In addition, although the majority of parents with minors in the household (75 percent) understand that a court will decide who the children’s legal guardian becomes if there is no will at the time of both parents’ death, only 39 percent have any estate planning documents in place.

"The 2011 Wills & Estate Planning survey shows parents may not be taking the necessary steps to ensure their wishes for the care of their children and estate are followed in the event that both parents were to pass, for example due to an accident," said David Palmieri, vice president and managing director of Marketing and Consumer Solutions at LexisNexis. "Additional research indicates that many parents consider wills to be more appropriate for those with significant wealth and as a result, they risk leaving the fate of their children in the hands of the courts instead of being directed by an enforceable legal document."

Reasons given for not making a will or estate planning a priority vary widely. According to the survey, 37 percent of Americans cite a current focus on "essentials," such as paying bills and buying groceries, as the top reason they don’t have any estate planning documents. Other reasons cited by survey respondents include:

• Not necessary (18 percent)
• Too complicated to deal with right now (16 percent)
• Too expensive (14 percent)
• Belief that their spouse and/or children will automatically receive any assets that they have (13 percent)
• Too time consuming (6 percent)

 Other findings indicate that age and gender play a role in whether a person has a will or estate planning documents. For example, the majority of Americans report that they are most concerned about preserving their health (70 percent) and having enough money to retire (50 percent) as opposed to protecting their financial assets (43 percent), while women are more likely to be concerned about maintaining their weight (47 percent) than protecting their financial assets (44 percent).

Additionally, Americans 18-34 years old are more likely to report that they are most concerned about preserving their health (64 percent), having enough money to retire (52 percent) and maintaining their weight (51 percent) rather than protecting their financial assets (44 percent). Interestingly, one in five Americans 18-34 years old (22 percent) believe it is becoming less important to have wills because people are living longer, healthier lives.

There is no need for me to repeat any of the messages of the above article-- they speak for themselves.  Let me just say that everyone should have an estate plan, regardless of your age and stage of life.  Parents of minor children should provide for guardians and create trusts to manage assets until the children come to an age which is appropriate for them to inherit a potentially large sum.  Older folks should put their affairs in order as a true and huge gift to their surviving children upon death.  These are just two examples of classes of people who should do estate planning, but it applies to anyone and everyone with assets and opinions about where those assets should go upon death.  So delay no longer--- call me to get started on that estate plan you have been putting off for any number of years.  You will not be sorry.

 

Estate Planning For Parents of Minor Children: "But We Just Can't Decide on Guardians!"

As parents of minor children, it is absolutely essential that you have an orderly estate plan in place. This at a minimum means executing a will, which is a legal document that sets forth your wishes regarding disposition of your assets upon death, designates those individuals who will be responsible for the orderly administration and distribution of your estate, and designates the guardians of your minor children. Also strongly advised is the creation of one or more trusts to hold and manage your assets for the benefit of your children during their minority in the unthinkable event of the demise of both parents.

The selection of a legal guardian for your minor children if both parents decease is perhaps the most crucial component of estate planning for young families. You may select grandparents, aunts and uncles, cousins, or even close friends who are not related. For many, the choice is easy or obvious. Yet for others, this can be a daunting and seemingly unsolvable task. I have had clients tell me that they really want to put their estate plan in place, but they cannot because they just can't choose a guardian. This is NOT a good reason to delay or suspend the creation of an estate plan. My advice is to select the best among the bad options. In the absence of your guardian designation, the courts will control the decision of guardianship, and your children may well end up in the hands of the person(s) you would least want raising your children, or even worse, in the social services system. So bite the bullet and make that decision, even if it isn’t perfect.

In addition to executing your wills and designating guardians, I recommend the creation of one or more trusts whose purpose it will be to hold, manage, spend and ultimately distribute your assets for the benefit of your children. Within the trust, you will designate trustee(s) who will be responsible for these tasks. The trustee(s) may or may not be the same person(s) as the designated guardians, and there are pros and cons to choosing the same person for both tasks. The trust will set out the terms on which your trustees will manage, invest and spend your assets for your children’s benefit during their minority. It will also allow you to determine at what age, or ages, your children will be entitled to receive outright distribution of all or a portion of their trust shares. In the absence of a trust setting out such provisions, the assets will be held for your children in a statutory (UTMA) structure, and will become available to your children free and clear at age 18. For most parents who have saved to fund their children’s college educations and want to ensure that the funds will be used for education and related purposes, this would not be the desired outcome. A trust permits you to delay outright distribution of assets until a later age, while still permitting the assets to be available to the children, at the discretion of the trustees, for appropriate uses.

A simple essay such as this cannot fully set out all of the considerations which go into a comprehensive estate plan for young families. The message here is simply that if you are the parents of minor children, I believe you have a responsibility to have wills and a trust in place. It is a gift that you will leave to your children in the unimaginable circumstance that neither parent survives to see your children into adulthood.