Though it could be suggested that you should have an estate plan in place as soon as you become an adult in the eyes of the law, as long as you are single and sans significant assets you can probably put it on the back burner. But once loved ones are depending on your income to maintain their standing of living an estate plan does become essential. This is true when you get married and your spouse is relying on you, and it becomes doubly important when you have children. If you and your husband or wife were to be killed suddenly in an auto accident, who would care for your children? Where would the financial resources come from? These are the questions that you need to answer in your estate plan.
You can address the matter of who will be raising your children on a day-to-day basis by naming a guardian in your will. As for the financial side, most young couples have not had enough time in the working world to amass financial reserves that are sufficient enough to provide for the needs of their children for ten, fifteen, or twenty years. Life insurance is the solution, and the way that the proceeds can be handled in behalf of dependent children is though the creation of a testamentary trust.
A testamentary trust is created via terms elucidated in your last will and testament; as the name implies it is a trust within a will. You name the trustee and this person will administer the assets in the trust, which may be largely comprised of insurance policy proceeds, until the children become adults per your wishes as stated in the will. Clearly the role of the trustee is an important one. He or she must administer the trust for its duration, and it can be a time consuming affair that involves ongoing interaction with the probate court. So it is important to choose your trustee carefully and make sure that this person is fully aware of the totality of the responsibility that he or she would be undertaking.
- Effective Planning for Single Seniors - October 1, 2023
- Your Guide to Navigating the Labyrinth of Trusts - September 28, 2023
- Paving the Way For the Future: An Estate Planning Guide for Millennials - September 24, 2023
