ESTATE PLANNING OFFERS PARENTS A CHANCE TO PLAN AHEAD
To a parent, the world can be a scary place. Handing the car keys over to a new driver, catching the toddler before they touch the hot stove, dropping your teen off at college for the first time — the list of worries is endless. But there’s another that many parents may not consider until it is too late: What happens if you aren’t able to be there for your kids anymore?
For children, the death or serious illness of a parent can represent one of the biggest threats to their well-being and security. And while parents can’t always stop bad things from happening, they can help their families cope with the changes that life may bring — but only if they plan ahead.
Estate planning gives parents the chance to do just that, allowing them to decide how their assets and responsibilities should be handled in the event that they die or become incapacitated. With the help of an attorney, parents can pursue the best protective course of action by drawing up a will or trust, developing advance medical directives and naming financial and medical powers of attorney, to name a few options. Estate planning allows parents to protect their children both during life and after death — a priceless gift to those you love.
“Obviously, a trust cannot replace the parent,” said John Jolley, an estate planning attorney with Jolley Law Group on Hilton Head Island. “But (it) can provide the mechanism to protect young beneficiaries. Clients with young children should create a contingent trust for children — that is, a trust to be funded only if something happened to the parents. The terms of the trust would detail who would manage the assets and how the assets would ultimately be distributed to the children.”
While parents can’t always stop bad things from happening, they can help their families cope with the changes that life may bring.
A trust is a set of instructions that become effective immediately upon execution of the document and continue on beyond your death. And trusts aren’t limited to parents. Anyone — grandparents, aunts or uncles, close family friends — can establish trusts for children.
According to Elizabeth Mayo, an estate planning attorney with Novit & Scarminach on Hilton Head, these instructions are even more important when dealing with children with special needs.
“If a disabled child has assets in his or her own name, (they) may not be eligible for governmental and other benefits to which they would be otherwise entitled,” she said. “A carefully drafted special-needs trust can hold assets for a disabled child without affecting benefit eligibility.”
Another advantage to trusts is that their value lives on long after parents do, which can help children who run into unexpected problems.
“If a child has an addiction problem, a trust can arrange and pay for treatment and assist with finances,” Mayo said. “If a child is a spendthrift, a trust can manage that also. A trust can also provide that the children receive their inheritance in increments, rather than in a lump sum.”
Jolley agrees, adding that trusts are “a good way to protect beneficiaries from certain creditors and even from the beneficiary’s bad decisions.”
Many attorneys who specialize in estate planning offer a free initial consultation to discuss specific goals. Afterward, a written quote for the work is provided, and if the client opts to proceed, the estate plans should be reviewed every four or five years — or sooner if conditions have changed, like sudden wealth, a move to another state, or the death of a spouse or child.
While Jolley said online tools for setting up wills and trusts might work for some families, those formulaic options can really only be counted on when life goes according to plan.
But when it doesn’t, “a qualified professional is key in navigating complicated options,” he said.
Mayo said that professionally crafted trusts are simply more versatile: “I can make the documents say anything they want,” she said. “I am not sure that standard online documents would contain the flexibility that can be written into a trust.”