The following is an estate planning case study on how I helped a family of 7, a married couple with five children. This estate plan put their family at ease and ensured stability, structure, and peace of mind for their family should the parents get sick or die while the children are young.
The estate planning began with a consultation with the married couple to ascertain their goals and wishes. We discussed their net worth, how their assets were titled, and how they wanted their children raised if the unimaginable happened. After this interview, we developed a legal strategy that would be best for them.
Guardianship of Minor Children
The number one priority is the children. Who will take care of the children? Who will take them in and raise them? That position is called a guardian. We had to determine who would be the guardian. One of their children was barely old enough to take in the kids. They thought this adult child was the best option because he already knew the rhythms of their lives and would provide the most stable environment. So we name him as the guardian over the younger children. But what happens if he’s not available? What happens if he passes away while they’re still young? We needed a backup plan, so we had to name an alternate, or successor, guardian. They thought through the options of family and friends. They opted with family friends who were more aligned with their values and had the physical ability to match their children’s energy levels.
Trust
We decided on the guardian, but what about the assets? What to do about the assets when there are young children? We discussed the types of assets they had and the need to support their children until at least adulthood. The best legal strategy for them was to create a trust.Every estate plan is different and unique, but a trust was the best estate planning tool for them. It allowed their assets to remain in trust until the children reached a mature age while paying for health, education, maintenance, and support. What 19- or 21-year-old needs to receive a huge chunk of money? We decided the mature age for their children to inherit would be 25.
Funding the Trust
We deeded the house into the trust so the trustees can manage it seamlessly after they pass away (hopefully many, many, many years from now!). It is a revocable trust, so they can sell the house anytime and/or add additional property. We discussed what to do about their life insurance policies, retirement accounts, and other assets in relation to the trust.
Who’s the Trustee?
The married couple who created the trust are the initial trustees, but who takes over if they are both deceased? It may or may not be the same person as the guardian. Because of the age restriction on receiving their inheritance, we didn’t name the guardian as the trustee because the guardian, their child, was not old enough to inherit. Furthermore, they needed someone as a trustee who managed money better and who was financially savvy. We named a family member the trustee and a family friend the backup, or successor, trustee. Always have that backup plan!
Other estate planning documents
I also created wills for the two of them. The wills I prepared for them are called “pour-over” because they catch anything that’s not already in the trust or given as a death benefit and pour it over into the trust.
I did a power of attorney because that’s one of the most important documents of an estate plan. What happens if you are incapacitated, such as being stuck in the hospital for weeks on end? Who will handle your affairs? Who will pay the mortgage, utilities, car note, etc.? Who will take the kids to the doctor, school, and other activities? An agent named in a power of attorney can handle these matters on their behalf. So, I prepared a power of attorney, naming an agent and an alternate agent.
Then, I did the advance directive for healthcare. This is the document for end-of-life decisions. Do they want life-sustaining treatment if they are terminally ill, injured, or permanently unconscious? The advance directive for healthcare also designates a proxy to speak on their behalf. So, they named each other first and then family as the alternate proxy.
Next Steps
Every estate plan is unique and created for the specific needs and goals of the client. This case study is not advice as to how to prepare your own estate plan, rather, it’s for inform you what an estate plan may look like.
To know what you need for your estate plan, contact Huntsville Estate Planning Lawyer, LLC to schedule a consultation.