Congratulations on your new family! You are in the midst of an exciting adventure, but it’s an adventure with real-life concerns. Among them – how best to protect your children should something happen to you?
In my practice, I try to patiently walk clients through the maze of choices they need to make as responsible parents. Here are some of the topics every new parent should consider:
NOMINATING A GUARDIAN: Guardians are persons appointed by a court to care for minors too young to care for themselves. In a guardianship, the court appoints a “guardian of the person”, to make decisions about personal care, such as where the child will live and what kind of care they will receive. The court also appoints a “guardian of the estate” to handle the child’s financial affairs until he or she comes of age.
Choosing a person to nominate as guardian is rarely easy. The place to nominate a guardian for your child is in your Will. You can use a Simple Will, Husband and Wife Wills, or a Pour-over Will attached to a Revocable Living Trust. The best choice for you will depend on your family and financial situation. We’ll provide you with the help you need to make the choice, and craft a nomination that can survive challenges by surviving relatives who might disagree with your choices.
INCAPACITY DOCUMENTS: These days, estate planning is not just about your property; it’s also about you. You may wish to consider signing an advance health care directive, formerly called a “living will”, which specifies your wishes about life-prolonging treatment should you become severely ill. There are also other documents, called durable powers of attorney, which can be used to give those you trust the power to look after your financial affairs while you cannot. Without these documents, your spouse may not be able to handle all of your affairs!
If you don’t have Incapacity Documents, a court-overseen Conservatorship may be necessary, costing time, money, and invading your personal privacy. By crafting these documents while you are competent you may be saving your family from heartache and grief in the future.
PREVENT SQUANDERING OF ASSETS: Without a Will, or even with a Simple Will or Husband & Wife Wills, your children will be entitled to their whole inheritance when they reach the age of majority. Can you imagine having a windfall when you’re 18?
Sudden wealth and eighteen year-olds rarely go well together. They rarely have the maturity to resist temptation, and some are susceptible to swindlers. Left to his own devices, an eighteen year-old and his money will soon be parted.
Select a Testamentary Trust or Revocable Living Trust to delay the distribution of your assets until your children will be more mature. Also ask your attorney about Spendthrift Provisions, which will prevent your child from pledging his or her inheritance as collateral for a loan!
PRESERVE YOUR PROPERTY FOR YOUR CHILDREN: It’s important to minimize costs of administering your estate. There are many different costs associated with the passing of property on death. Doing nothing is the most inefficient way of going about things: a sizable portion of your estate may go to the government or lawyers, rather than to those you love.
With proper planning, some of these costs (such as probate fees) are completely avoidable. Others (such as federal estate tax) can be minimized. Without estate planning, though, you will leave less for your family.
Probate Fees are set by law in California and are based on your GROSS estate, without taking into account mortgages or other debts! Here is a chart that illustrates why you need to ask the Law Office of Daniel K. Printz to help you avoid probate:
Fair Market Value Probate Fees Percent of Estate Lost
$200,000 $14,000 7%
$600,000 $30,000 6%
$1,000,000 $46,000 5%
$4,000,000 $66,000 3%