Essentially, estate planning needs to be done before you need it.  I typically say “sooner is better than later”.  Estate Planning is not a once in a lifetime event.  Instead, estate planning should be done early in your adult life, and updated as circumstances change.  

Before a person has significant assets, you should determine and document who will be making medical or financial decisions in case of a serious accident or illness.  These documents are the Health Care Proxy, Living Will and Power of Attorney.

As a parent of young children, there are a number of additional considerations.  It’s a mistake to assume that all assets will pass to your spouse or your spouse will be in charge of all aspects of decision-making.  This is likely an over-simplification.  Your spouse will only have direct access to accounts on which they are a beneficiary or joint account holder.  This will not include health insurance, medical information or records, utilities or numerous other assets and financial accounts that are in individual name.

Next, if you are deceased, both your spouse and children under age 21 have rights to limited assets prior to creditors.  Then the bills are paid.  Then the spouse gets the next $50,000, then the spouse and children share any additional assets, unless otherwise specified in a Will.  The Court will frequently appoint a Guardian to look out for the “best interests” of the children, ensure that the child(ren) receives their full share, and that the share is properly deposited in an account controlled by the Court until it is released to the child at age 18.

Where there is a large “wrongful death” payment, the Court will look at the ages of minor children and divide the children’s portion of the wrongful death payment unequally between the children, based on their ages and a presumption of support which that money is meant to compensate for.  The youngest child will receive the most, and the oldest child will receive the least.  

Typically, a parent of young children will want to specify who shall be responsible for the rearing and personal care of their children – the “Guardian”.  Additionally, they want to specify a “Trustee” who shall be responsible for any assets that may come to the child, how they may be invested, under what circumstances they are to be spent on behalf of the child, and at what age they are to be released outright – typically sometime beyond age 21.  By designating a Trustee, you are writing the rules for use of funds and eliminating the need for Court control of the funds once they reach the trust.  

The most difficult part of these documents is typically deciding who shall take what role in the plan – Executor, Guardian, and Trustee.    Think it through, write it down, make it official and binding, before it’s too late.

  Law Office of Kathleen M. Toombs PLLC

157 Barrett Street, Schenectady, NY  (518) 688-2846