How to Incorporate Young Children into Your Massachusetts Estate Plan
While it is important for people of all ages and with all types of family circumstances to have an estate plan, for parents, estate planning takes on heightened importance. We recently discussed some special considerations for parents whose children are entering adulthood. In this article, we will cover some unique factors involved in preparing an estate plan shortly after your child’s birth.
3 Key Considerations for Planning Your Estate as a New Parent
As a new parent, there are three aspects of the estate planning process that are particularly important for ensuring your children’s wellbeing and financial stability in the event of your death or incapacity. These are: (i) inheritance and wealth preservation, (ii) child guardianship, and (iii) healthcare and financial management.
1. Inheritance and Wealth Preservation
If you die without an estate plan in Massachusetts, your assets will be distributed according to the Commonwealth’s law of intestate succession. While this may mean that your assets ultimately end up in your children’s hands, this is not necessarily the case. If the probate estate assets pass to children directly, a conservator will need to be appointed to manage the assets for the benefit of the child. A conservator will have to file an annual account with the Court until the child reaches the age of 18, adding an administrative burden and therefore reducing what the child inherits. Once the child reaches the age of 18, the conservator must distribute the assets to the child. Most people feel that 18 is way too young to inherit. Also, if you have a sizable estate, a significant portion of your estate could be lost to estate taxes and the costs of probate administration. By putting together a comprehensive estate plan, not only can you ensure that your children receive the assets you intend, but you can also mitigate the financial and emotional burdens of administering your estate.
In many cases, parents with young children will find it desirable to establish a revocable living trust. This is an estate planning tool that not only avoids probate and the appointment of a conservator
, but that also allows you to place parameters around your children’s access to their inherited funds. If you establish a revocable living trust, you will retain control over your assets during your lifetime; and, in the event of your death, your appointed trustee will manage the trust for the benefit of your children until they reach the age at which you want them to have full access to their inheritance.
2. Child Guardianship
The second key aspect of planning your estate as a parent with minor children is guardianship. By appointing a guardian during your lifetime, you can rest assured that your children will receive the care and nurturing they need in the event that you die unexpectedly. While appointing a guardian in your estate plan is a straightforward process, appointing a guardian after death can be quite the opposite. You can also use your estate plan to set aside funds for your chosen guardian so that he or she can purchase children’s furniture, buy a larger vehicle, or even buy a larger home.
3. Healthcare and Financial Management
Finally, as a new parent, it is also important to identify someone who will take care of you in the event that you become incapacitated due to an illness or injury. By preparing a healthcare proxy, living will, HIPAA authorizations, and a power of attorney, you can ensure that someone you trust will make important decisions for you with you and your children’s best interests in mind.
Of course, there are various other factors you will want to consider when preparing your estate plan as well. From purchasing life insurance to establishing a special-purpose irrevocable trust (such as a “special needs trust”), different family circumstances call for different estate planning strategies. To learn more and choose the options that are best for your family, we encourage you to contact us for a confidential initial consultation.
Schedule a Confidential Initial Estate Planning Consultation in Cambridge, MA
Eckert Byrne LLC is an estate planning and estate administration law firm with offices in Cambridge, Massachusetts. If you are a new parent, or if you are anxiously awaiting the birth of your child, we invite you to call (855) 743-3136 or send us your contact information to schedule an appointment with one of our attorneys.