08/25/2021
MINOR CHILDREN
When I talk about estate planning, the topic I bring up most often is minor children. Everyone can benefit from an estate plan, but having one is especially important where minor children are involved.
To understand why, let’s start with another question: What happens if you die without a Last Will and Testament? State statute, specifically the New York Estate Powers and Trusts Law (EPTL), determines how your estate is distributed. Where minor children are involved, there are several issues that can arise that can easily be addressed with an estate plan.
Consider the following example:
A husband and wife are married with no children. The wife came into the marriage with a house in her name, a large savings account, and several other individually titled assets. If the wife were to die, her entire estate would pass to her husband under state statute. No problems there (as long as that is wife’s intent).
Fast forward a couple of years. Husband and wife now have a child and no estate plan in place. If wife is to die, husband is now only entitled to the first $50,000.00 plus one half of the wife’s residual estate. The remaining half now belongs to the child.
Why is this a problem? It was likely wife’s intent that husband should have all of the family property and funds available to him in order to continue raising their child. Furthermore, a guardian will need to be appointed at Surrogate’s Court to manage the funds of the minor child until they turn 18. Money and property husband may have been counting on are now wrapped up in court administration.
How could this issue have been avoided? Husband and wife make Wills leaving everything to each other first.
In a Will, husband and wife also have the added benefit of making more specific provisions regarding what happens to funds received by their child if they are both deceased. Eighteen is the magic number under state statute- but as we know, most eighteen-year-olds are not the most responsible with money. In a Will, parents can create a trust and appoint a Trustee to manage funds for their child(ren) until whatever age or ages they choose.
For example:
Husband and wife can create Wills leaving everything to each other first, but when they both die, the estate funds will go into a trust for the benefit of their child. Husband and wife can appoint a Trustee (usually another family member) to manage the funds. Husband and wife can grant the Trustee discretion to use funds to pay for child’s college, vocational training, books, transportation, etc. Husband and wife can also designate a more reasonable age or ages for payments of principal (i.e. child receives estate funds at 21 instead of 18 OR child receives half of the trust principal at 21 and the remaining estate funds at 25). The possibilities are endless and should be tailored to the unique needs of each family.
A Will also allows parents to designate a guardian for their child(ren) if they should both die before a child is 18.
Having minor children is only one example of the many considerations that can be addressed by a proper estate plan.
I offer free consultations so that we can identify potential issues and work together on instituting a plan to address them.
Call 716-602-6985 to schedule your estate planning consultation today.
The Law Office of Melissa C. Schreiber
“Where there’s a Will, there’s a way.”