Every now and then we come across high earners that have children but no trust/estate plan in place. This is problematic, costly, and time consuming if something happens to the parents.
Here's what may happen:
- Probate - parents' estate will go through probate court, a process that identifies the deceased's assets, pays off debts, and distributes remaining assets. Lengthy and costly and can be avoided with a trust.
- Guardianship - if the parents didn't designate a legal guardian in a will, the court will appoint a guardian for the children.
- Control of Assets - the court will also appoint a conservator or trustee to manage the children's inheritance.
- Inheritance at majority age - when the children reach the age of majority, they'll typically receive the remainder of the inheritance outright, regardless of their capability to manage it.
These situations underline the importance of estate planning, including setting up a trust.
A trust can avoid probate, ensure that a trusted person manages the children's inheritance, and control when and how the children receive the inheritance.
Let these decisions be made by you and not the court.
If you're a parent with children and no trust in place, talk to an estate attorney to see if it's something you should consider.
As financial planners, we're regularly looking for deficiencies and ways to improve our clients' financial lives.
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