Do new parents need estate planning?
There are many rites of passage to adulthood, and many consider parenthood to be one such definitive marker. Yet do parents accept the responsibility of caring for dependents by preparing estate plans, in the event of unanticipated incapacity or tragedy?
An attorney that focuses on estate planning may hope the answer were always yes. True, dependents usually inherit from a parent under the laws of intestacy. Yet there is no guarantee in the absence of a will or trust that a child will receive the assets intended for him or her. This may be a very real concern for remarried parents with children from a first marriage.
Yet even if assets did pass to a dependent under the laws of intestacy, there are other undesirable outcomes that can happen when a parent has not executed a will or set up a trust. For example, a state-appointed guardian may be appointed in the absence of proper estate planning, which may not be the most ideal way to approach the special nuances of a child’s requirements and needs, as only a parent understands.
In addition, a lump-sum distribution to dependents under the laws of intestacy may not impose any restrictions on how that inheritance may be used. If a dependent were to incur substantial debts, his or her creditors might be able to reach that inheritance. With a spendthrift trust, however, the assets are not within the dependent’s control, and thus are usually out of the reach of creditors.
On an emotional level, estate planning also can be a way for a parent to prepare a personal legacy letter, to be read after his or her passing. Such a letter reminds dependents of how much they were loved and that parents were planning for their futures. An attorney familiar with wills, trusts and other approaches in estate planning can explain these choices in greater detail.