Surveys that are conducted find that most adults are unprepared from an estate planning perspective. In fact, less than 25 percent of people that are between the ages of 18 and 54 have estate plans in place.
Obviously, most individuals do not pass away when they are in this age group, but it happens every day. The thing that is especially disturbing about the lack of preparedness is the fact that many of these folks are the parents of dependent children.
Estate planning is one of the basic responsibilities of adulthood, but it becomes absolutely essential when you have dependents relying on you for everything.
The first order of business when you are planning your estate as the parent of a minor is the nomination of a guardian. This individual would care for the child or children if it ever becomes necessary.
As long as the court cannot find a reason why the individual would not be able to act in the best interests of the children, your selection would be honored if a guardianship is required.
You should definitely make sure that your family would be protected financially if you were to pass away suddenly. Life insurance is the ideal income replacement vehicle, and term life is quite inexpensive for people that are relatively young.
Of course, a child cannot handle their own money until they reach the age of majority. To account for this, you can establish a living trust.
The trustee would manage the assets on behalf of the child if you pass away while they are still a minor, and a living trust can be the beneficiary of the insurance policy.
If you use a will as your asset transfer vehicle, you could include a testamentary trust. This is a trust that is contained within a will, and it would only become active if you pass away.
There are also custodial accounts that can be established for the benefit of minors, and this is another option that you can explore when you consult with one of our attorneys.
If you are going to be leaving a sizable inheritance to a young loved one that has not reached their full potential, you could make this person the beneficiary of an incentive trust.
To provide an example, let’s say that you have a granddaughter that is likely to be of college-age after you pass away. You could establish and fund an incentive trust for the benefit of your granddaughter.
A trustee would be named to administer the trust, and you can use a professional fiduciary that would act in a dispassionate manner. In the trust declaration, you can instruct the trustee to pay all of the beneficiary’s expenses as long as she continues to attend college.
You could provide a lump sum bonus upon graduation, and you can include incentives to guide your granddaughter toward graduate school. The terms could include a dollar-for-dollar match of her earnings on the job after graduation to instill a work ethic.
This type of trust can also be used to guide someone away from self-destructive behavior, like substance abuse or gambling problems.
Incapacity Planning for Young Adults
A provision contained within the Health Insurance Portability and Accountability Act prevents doctors from sharing health care information with anyone other than the patient.
As a result, if this hypothetical granddaughter attends college out of state and she is in a serious car accident, she would be protected under the HIPAA law. Doctors would not be able to talk about her condition with her parents.
With this in mind, young adults should sign HIPAA release forms as soon as they reach the age of majority to give their parents access to their medical information.
Take Action Today!
It is time to put an end to the procrastination if you have been going through life without an estate plan as a parent. You can schedule a consultation with a Memphis, Tennessee estate planning lawyer if you call us at (901) 763-2500 or (866) 997-6325 or fax us at (901) 763-2525.
We have attorneys that are licensed in Mississippi and Arkansas, so you should not hesitate to get in touch if you live in one of these states.
There is also a contact form on this site you can use if you would rather send us a message, and we will follow through promptly if you reach out electronically.