Security of finances and a home for our children is at the top of our list when we become parents of young children. With that, comes questions and answers about estate planning which is statistically initiated by young mother with newborns.
At our law office at Sirkin Law Group, in California, our firm caters to providing for security and estate planning for young families by specializing in wealth transfers and protecting your young children. Because we are facing a multi-trillion dollar transfer of wealth in the next decade, it is important to know a) where your assets will come from; and b) where your assets will go and how to leave it to your family to protect and avoid problems.
“Your wealth amount will inevitably vary during your lifetime, yet your goal of protecting your children will stay constant, regardless of your age and the age of your children,” says attorney Mina Sirkin, an expert in Probate and Wealth Planning in Los Angeles County, California.
There are three things that are on the top concerns lists by young mothers:
So how do you secure the future of your children in incapacity, death or divorce?
Provide for a way for your young and old children to receive benefits from your assets, if you are incapacitated:
- Providing for your children cannot be done in a plain Last Will and Testament, if you are incapacitated and not deceased. A Last Will and Testament only can provide for transfer of your assets upon your death. If you have a plain will, it does not operate if you are incapacitated. The solution for providing benefits to your kids when you become incapacitated is a trust and with appropriate provisions in a Durable Power of Attorney. If your kids are minors, you want to pay close attention to this particular issue.
- What to put in your Durable Power of Attorney for Asset Management to make sure your minor and adult kids get money, if you become physically or mentally incompetent: If you are supporting your minor or adult children, be sure to include a provision in your power of attorney, that your agent under a power of attorney can pay for your minor and adult children, in the same way you have done so. Loosen the incapacity determination to a letter by one doctor, and broaden incapacity to mean mental or physical incapacity in your power of attorney.
Next, provide for a way for your young children or older kids to receive assets, if you pass away:
- Simple Wills: What if you are not concerned about incapacity? If your concern is only your death, you can provide for the distribution of your assets in a Last Will. There are also testamentary trusts which are incorporated in wills and continue for the lifetime of children when you die.
- Revocable Living Trusts: However, the best way to protect your children is to create a revocable living trust in California.
- What Not to do with your bank accounts if you have minor children: Don’t even think about leaving your minor children as joint tenants on your accounts.
- If you leave a minor as a joint tenant on your account if you die while he or she is a minor, that asset cannot be collected without a full court guardianship. You can, however, create custodians for your minor on accounts. Custodial accounts are a way to allow an adult to collect an asset for a minor in California.
What do to about your Life Insurance to make sure your kids get it, if you are incapacitated or if you die?
First, make sure that you have named an adult custodian as a beneficiary for your minor kids, or a trustee as a beneficiary for the benefit of your child. Besides making sure you have enough insurance throughout the time your kids are minor, make sure you provide a way for payment of the life policy so that the policy does not lapse for non-payment, if you are incapacitated. Talk to your insurance agent to make sure you know what it takes to keep the premium paid, if you become incompetent and forget to pay the premium. If you move, it is even more important that you direct the insurance company to your new address, as lapse notices are tied to your address on record with the insurer. Remember that the insurance company has no obligation to pay your beneficiary if you die and your insurance has lapsed.
How do you make sure your kids are protected with enough money if you are involved in a divorce?
Support orders can be crafted to provide for the purchase of pre-paid life insurances, payments to trusts, and insurance payments monitored by the parent who has custody of the children. If you are a mother of young children and involved in a divorce proceeding, you want to make sure that you have your spouse enter into an agreement that you can make your own trust. There is an automatic stay on actions to fund trusts during a marriage when a divorce has been filed. The reason to ask your spouse to consent is that a will alone does not protect on your incapacity. Also, make sure that if you are negotiating for your ex to provide a life insurance policy, you have the right to get information, premium statements and beneficiary changes, in addition for a way to have you be notified of any lapse in the policy.
Mina Sirkin is a wealth planning attorney who is a California Board Certified Specialist in Trust Law in Los Angeles County. Ms. Sirkin assists young families in wealth transfers and wealth planning for incapacity, death and divorce for young families. Call us at 818.340.4479 and email us here.