A common misconception with estate planning is that it only applies to wealthy people. While it is important for people with wealth to help minimize taxes and preserve their wealth it is equally, if not more important, for anyone that has a family. If you pass away without having a Last Will and Testament the government will determine who will inherit your assets through intestacy laws and if you leave minor children the government will also choose who will become their guardian through a guardianship proceeding. Creating a Last Will and Testament puts you in charge of your assets and your children. This is increasingly important since many people live together as families and are not legally married. Without a legal marriage a significant other will not inherit property through intestacy laws and might have a harder time becoming guardian of children of which they are not legally related to.
A living trust can help protect your family even after you are gone. This is another tool that many people wrongly believe only applies to wealthy people. A popular strategy for our younger clients or clients with limited assets is to purchase a life insurance policy that names their Living Trust as the beneficiary. In addition to the protection that life insurance offers, a trust allows you to choose a successor trustee that will help a surviving spouse manage the life insurance proceeds. This protects your surviving spouse from the neighbor convincing them that it is in their best interest to invest the inheritance in a video game or whatever the “investment” may be. If both parents died at the same time or left children behind the trustee would manage the money for the benefit of the children until they reach an age of your choosing. The children would have access to the money for their education, health and support, but if they wanted for another reason they would have to convince the trustee.
We all know people who have passed away suddenly and unexpected. While it is unfortunate to see someone pass away it is even more difficult when they leave a family behind that is not provided for or what ends up a legal battle to settle an estate and determine guardians of minor children. While it is not always pleasant to talk about a little planning now can make a world of difference.