People always plan ahead for events that are definitely going to happen in the future. This would apply to tax day, an important test, and many other scenarios. Curiously, many of the same individuals are completely unprepared from an estate planning perspective.
Caring.com has taken interest in this subject over the last few years, and they have been conducting surveys. The 2021 version found that a mere 44 percent of adults that are 55 and older have wills or trusts in place.
As you might imagine, the number is smaller for millennials. Less than 30 percent of these folks have estate plans, and some people would say that this is understandable in light of average lifespans.
Yes, it is true that most people do not pass away when they are under 50 years old. At the same time, it is unlikely that you will total your car in an accident, but you carry automobile insurance just in case.
The same mentality should apply to the estate planning process. It becomes especially important when you get married, and the stakes are even higher when you have children.
If you are a parent, do you want the court to decide on a guardian for your children, or would you rather make the choice yourself? It is probably safe to say a hundred percent of parents would opt for the latter, but a small percentage of them have actually done so.
An estate plan for the parent or parents of dependent children will include a simple will that can be used to designate a guardian to care for the children if it becomes necessary. The court would still be involved, but they would honor your choice unless there are some extenuating circumstances.
Most families rely on two incomes to make ends meet. The loss of one income could be financially devastating, but there is a simple solution. You calculate your family’s needs and use life insurance to serve as an income replacement vehicle, and term life is inexpensive.
Since minor children cannot handle their own money, you have to address this reality when you are planning your estate. A testamentary trust can be included if you have a will, and it would not become active until and unless you pass away.
You would name a trustee to act as the administrator, and they would manage the trust on behalf of your child or children if they are minors at the time of your passing.
A will can cover the basics, but the living trust is a better choice for a wide range of people. If you have a living trust, you would act as the trustee, so you would be able to use the assets in the trust in any way that you see fit.
This would be a revocable trust, so you could dissolve the trust entirely and take back direct personal possession of the property if you ever choose to do so. You can name a successor trustee when you draw up the trust declaration, and they would assume the role when you are gone.
If you have minor children at that time, the trustee would manage the resources on their behalf.
Another major benefit is the simplified estate administration. A will would be admitted to probate, and the court would provide supervision when the estate is being administered.
It will take about eight months at minimum in most jurisdictions, and the heirs do not receive anything while the estate is being probated. Privacy is lost, because the records are available to the public, and probate expenses erode the value of the estate.
On the other hand, if you use a living trust, the trustee would be able to distribute assets outside of probate. The principal would be protected from the beneficiary’s creditors, and you do not have to provide lump sums all at once if you would rather spread out the distributions.
An estate plan for a millennial should include advance directives for health care. A living will is used to state your life support preferences. You can name someone to make other types of medical decisions on your behalf in a durable power of attorney for health care.
If you have a living trust, you can name a disability trustee to administer the trust in the event of your incapacity. To account for property that is not held by a trust, you can name a representative in a durable power of attorney for property.
We Are Here to Help!
Our doors are open if you are ready to work with a local South Carolina estate planning lawyer to put a plan in place. You can send us a message to request a consultation appointment, and we can be reached by phone at 843-815-8580.
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