Getting in the car, my toddler calls out, “Dada, buckled? Mama, buckled?” He’s checking to make sure we’ve buckled our seat belts. A simple task that helps protect us from the worst-case scenario. Moms are wired for worst-case-scenario thinking, and this motivates us to have a plan in place to protect our families. While creating an estate plan might not be at the top of anyone’s to-do list, it is a simple task to ensure there is a plan in place to protect your family when you pass away.
We reached out to our friends at RackiLaw for three things all young families should do to protect their estate:
1. Plan for the care of your children.
It’s tough to consider, but all young families should plan for the possibility that the parents may not be there until the children reach maturity. Without the designation of a guardian for your children in a properly drafted will, the court will decide who will care for your children if you are gone. This could be an ugly, messy fight among friends and family members. In addition, if the family has more wealth than they would want their children to control with unbridled discretion at age 18, then consider a trust that appoints a trustee to manage the assets until a later age (e.g., 25 or 30), preventing a situation where your BU undergrad has control over the family assets before they’re ready.
2. Skip the public court process.
Whenever someone dies in Massachusetts, all of his or her assets that are not jointly owned with another person or have a designated beneficiary will pass through a public court process called probate. This process is public and takes months or years to complete. The value of your probate assets is listed on a form published online. In general, it involves a long list of administrative tasks that your family would prefer to skip as they are grieving your loss. Working with an attorney to create a living trust is a means of avoiding the probate process. By using living trusts to hold assets that would trigger this probate process, young families can ensure that this process will be bypassed upon the death of the parents.
3. Minimize taxes.
There is a long list of federal and state taxes to consider when planning your estate: income, capital gains, estate, GST, gift — to name a few! The rate on some of these taxes is 40%, so the stakes are high. It can be well worth the time and expense of speaking to a qualified attorney for an hour or two to protect your hard-earned wealth from unnecessary exposure to taxes.