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Newport Beach Estate Law Blog

Your will becomes especially important when you have kids

If you do not have children -- maybe you just don't have them yet, or maybe you don't plan to have them at all -- it is still important to write a will and do your estate planning. However, this becomes especially important if you do have kids. It raises the stakes.

Prior to the birth of your children, the will is more about you and your assets than anything else. It's just a way to make sure that your assets go to the people you choose, to reduce the tax debt of your estate and things of this nature. It's almost business-like in nature.

Where will your special needs child live as an adult?

When faced with the emotional and medical challenges of a special needs child, you might not be able to spare the time to think about their future as an adult. Maybe you needed to take it one day at a time, to carefully hope for a long and happy future for them.

However, when the day comes, and you realize your child has become an adult, what is your plan to help them achieve their lifelong goals? Do you know how a special needs trusts can help them live to the fullest?

These tips can make life easier if your child has special needs

If you have a child with special needs, you may have to care for that child for the rest of their life. You love your child, but that does not mean this isn't taxing and difficult at times. It's a full-time job. It comes with many hurdles you have to overcome. It helps to define your life in ways you never expected.

When parents are honest with themselves about the difficulties this presents, it's important to think about ways to make it easier. A few helpful tips include:

  • Find other parents who also have children with special needs. Join a support group with them. Isolation is a real issue for parents who feel like they just have to take care of their child and having a group can get both you and your child the socialization you need.
  • Take breaks and get assistance. Don't assume you have to do it all on your own. Maybe you have a spouse who can be the sole caretaker one night a week, for instance, so that you can get out and meet with friends or engage in hobbies.
  • Be grateful for the little things. Take joy in life. A positive mindset, even if you have to intentionally create it, can change the way that you see the world.

Will you have a second home to leave your kids?

People often spend a lot of time trying to figure out how to put the family home into their estate plan. Do they just leave it to the kids in equal amounts? Do they sell the house and leave the money to the children? Do they ask the children which kids want it and which ones do not?

This can get complicated enough, but it gets even more complex when you have a second home or a vacation property to leave behind. In 2018, studies found that 4.13% of Americans between the ages of 50 and 64 had at least two homes. For those between the ages of 30 and 49, it was even higher, at 6.02%. If you're doing your estate planning, this is something that definitely could be on your radar.

What's unique about estate planning for women?

Estate planning can be emotional. No one wants to think about their own death, and making plans around your passing can seem morbid.

However, taking steps to make sure that your estate is squared away can save your loved ones from additional grief after you pass. Here are a few considerations that women should especially be aware of when planning their estate.

Estate planning steps to get you started

Like many people, you have put off estate planning for years. You've finally decided to settle down and do it, but now you're not sure where to start. It all feels so overwhelming, especially as you deal with retirement and other such events.

To help you, here are a few early steps you can take:

  • Make a comprehensive inventory of all of the physical items you own that you want to pass down to your heirs. These could be large items like boats, cars and homes, and they could be far smaller things like artwork, collections and furniture.
  • Make a second inventory of the assets you control that are not physical. This could include your bank accounts, your life insurance policy, your pension plan and other financial assets.
  • Make a third list, this time focusing on your debts. Consider things like credit card debt, mortgage payments, property taxes, business debt and more.
  • Check to make sure all of your accounts have been updated properly. For instance, people sometimes forget to update the beneficiary on a life insurance policy.
  • Decide exactly who you want to name in the estate plan. You can be flexible with this list, but it pays to start planning early to decide how to split things up -- and so that you do not forget anyone.
  • Figure out who you want to name as the estate administrator. This is a big responsibility, so you probably want to talk with them to make sure they're up for it.

Things to consider when selling the business to a child

One way to transfer your family business to one of your children is simply to sell the company to them before you pass away. They take over ownership, and you don't have to worry about suddenly handing them the company at the end of your life.

There are benefits here, but you also want to consider some potential drawbacks.

What type of living trust is right for me?

 

Determining the best type of trust for your unique situation can be challenging if you do not understand all of your options. Different kinds of trusts serve different purposes and are appropriate under different circumstances. However, living trusts are a common kind of trust that people in a variety of situations can benefit from.

Divorce may change what people leave to their kids

It's no secret that divorce has an impact on estate planning. When your marriage ends, you need to make sure your estate plan does not still leave assets to your ex. You need to update your life insurance beneficiary designation. You need to consider who will make end-of-life care decisions for you. And these are just a few examples.

One thing to consider, though, is the way that it impacts your relationship with the kids. Is that, in turn, going to change how much you want to leave to them in your will?

Kids often feel pressure to take over the family business

Business succession planning gets complicated. If you leave a company to your children, are you making their career choices for them? What if they wanted to do something else with their lives?

It's a worry that many parents have, and it's true that children often feel this pressure -- even if their parents do not put it on them directly.

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Newport Beach, CA 92660

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