Young children are often the driving force for parents to come to see an estate planner and set up a trust. The concern that the worst possible situation may occur and the children will be raised without their parents is unfortunately something that must be considered. When parents do not plan ahead for their minor children, the resulting effects can be long-lasting.
When a minor child inherits money or property following the death of one or both parents, proper estate planning can make a huge difference in the child’s life. The Marietta Daily Journal’s article, “Using Trusts to Pass Inheritance to Minor Children” explains the process. A probate judge will appoint a guardian or conservator to manage the minor child’s assets. The conservator or property guardian will not be the child’s parents or legal guardian, as this would raise questions regarding a conflict of interest. Parents are urged to remember that unless good planning is done, when the child reaches 18, he or she will receive their inheritance. Few 18 year olds are capable of managing wealth of any size, and the potential for disaster – personal as well as financial – is real.
When you select a minor child as your beneficiary, consider placing those assets in a trust to keep him or her from spending foolishly. Trusts are simply a vehicle by which a person (the grantor or donor) transfers assets to a beneficiary (or beneficiaries). They receive the assets according to the trust document. A trustee manages the trust assets and enforces the terms of the trust.
Trusts also can transfer assets in installments or at a later date. For example, if an individual is too young or immature to deal with an inheritance. Trust assets can be set up to only be used for the health, education, maintenance and support of the beneficiary until a specified age so that the beneficiary can benefit for some time.
In addition, creating a trust and placing assets in it before death will let families or individuals distribute property without a lengthy probate process. Estate planning attorneys can structure a trust to fit your family situation so that your wishes for the distribution of assets will be carried out efficiently and properly.
Trusts are designed to help families address issues such as reducing estate taxes, avoiding probate court, or transferring assets. To structure a trust for your specific situation, contact an experienced estate planning attorney.
If you are appointed executor of an estate, your first task, according to a recent Forbes article, “What an Executor of an Estate Needs to Do,” is to identify an experienced estate planning attorney who can guide you through the complex process of settling an estate.
When settling an estate, an executor is in charge of these basic functions:
- Locating, collecting, and being responsible for the estate’s assets until they are distributed to the beneficiaries.
- Paying the decedent’s debts and estate administration expenses.
- Handling tax matters, including filing the decedent’s and the estate’s income tax returns and paying the income taxes, if any.
- Distributing the remaining assets in accordance with the terms of the will.
The financial responsibilities of an executor mean that he or she must make an investment analysis of all assets in the estate to determine which to sell and how the estate’s cash needs will be met. The majority of the administrative work in handling an estate is recordkeeping.
The executor must first arrange for his or her court appointment in probate court to obtain “Letters Testamentary,” which permits the executor to represent the estate to third parties such as banks and financial companies to collect, liquidate and distribute assets and other tasks. The executor must compile information about the decedent’s finances and then sell or divide certain assets among those named to receive them in the will or to pay taxes.
In addition, the executor must cancel the decedent’s credit cards, have utilities turned off and pay expenses such as rent, taxes and insurance premiums. Home repairs or maintenance may also be needed. The executor will also need to open an estate bank account to hold the collected assets. These funds are used to pay the bills.
An estate planning attorney can be a huge help with this process to ensure that everything is done right and that the decedent’s estate is settled in an efficient manner.