If You Have Minor Children and Life Insurance, You Need Estate Planning
Many couples believe that if they do not have large assets, they do not need an estate plan. This is not true! If you have life insurance or if you have children, you need an estate plan to help guide what happens after you are gone. Without one, the courts will have the ultimate say over who gets your life insurance benefits and who is appointed as guardian over your children.
What Happens If You Don’t Have a Trust or Will?
If you have minor children and pass away without a trust and/or will in place, the court will appoint a guardian to make financial decisions on behalf of your children. The court will also decide how your assets will be distributed. Without a trust and/or will, you won’t have any say in who raises your children or how your assets are used.
Additionally, if you have life insurance, the death benefit will be paid out to your beneficiaries according to the terms of your policy. If you don’t have a trust and/or will in place, the death benefit will be paid out according to state intestacy laws. This means that the money from your life insurance policy could end up going to someone other than who you intended, or it could be used in a way that you didn’t intend.
For example, if you have young children, the death benefit from your life insurance policy could be used to pay for their education. However, if you don’t have a trust and/or will in place, the money from your life insurance policy could be used for anything, including buying a new car or taking a vacation.
The Importance of Having a Trust or Will
If you have minor children and want to make sure that they are taken care of financially if something happens to you, it’s important to have a trust and/or will in place. A trust and/or will allows you to specifically designate how your assets will be distributed and who will raise your children.
But what type of estate planning will benefit you most? Both trusts and wills are an important part of many estate plans, and they have numerous benefits. An experienced estate planning attorney can help you determine which is best for you and your needs.
Benefits of a Trust
A trust is a legal arrangement in which one party, the trustee, holds property or assets on behalf of another party, the beneficiary. Trusts can be used for a variety of purposes, including estate planning, asset protection, and tax mitigation. Trusts can be revocable or irrevocable, meaning that they can be dissolved at any time by the grantor (the person who creates the trust), or they can remain in effect indefinitely.
There are many benefits to creating a trust, including avoiding probate (the court-supervised process of distributing a person’s assets after death), protecting assets from creditors and lawsuits, and reducing taxes. Trusts can also be used to provide for loved ones who are minors or have special needs.
Benefits of a Will
A will is a legal document that sets out how you would like your assets to be distributed after your death. It can also be used to appoint a guardian for any minor children. Creating a will ensures that your wishes are carried out and can help to avoid any family conflict.
Some of the benefits of having a will include:
- You can choose who will receive your assets
- You can appoint a guardian for your children
- You can specify your funeral arrangements
- You can make donations to charities
If you die without a will, your assets will be distributed according to the laws of intestacy, which may not be in line with your wishes. Therefore, it is important to have a valid will in place to ensure that your assets are distributed as you would like.
Looking for an Estate Planning Attorney?
If you have questions about whether a will or trust is right for you, call our law firm immediately. We can help you craft an estate plan that fits your needs and one that will protect the ones you love after your death. We know the state laws that might affect your trust and will use our experience and knowledge to provide exceptional legal guidance throughout. We know that your family and your situation are unique. That’s why we meet with you personally to help you learn more about your individual options. Call us today for a consultation and review, or fill out our confidential contact form.
John Park is a highly experienced attorney in estate planning, probate, business law and guardianship to help people organize the elements of their lives through careful estate planning and asset protection measures.