Stages of Planning

Under 59½ with Adult Children

Maturing Children – and Planning Needs

The next stage of financial and estate planning occurs when the married couple have attained the age when they may still have minor children as well as adult children.

Because a sudden illness and/or passing may incapacitate the parents, planning should be put in place to include a guardian for any minor children as well as an an individual to handle your financial affairs.  Instead of a simple Will, the husband and wife could prepare a Will with Testamentary Trust provisions for minor children along with a Durable Financial Power of Attorney, Durable Power of Attorney for Health Care, and Living Will.

The Will has two provisions for the children: 1) a suggestion of guardian over the physical placement of the children, and 2) an appointment of a Trustee over the monetary assets of the children. Remember, ongoing Probate Court jurisdiction requires formalities that increase the cost of administration.

If both parents were to pass away suddenly, the court would consider appointing a guardian over the person of the child for purposes of health, maintenance and welfare.  The guardian would then be responsible for day to day matters concerning the child, including placement in a school system, medical treatment, and other similar issues.

The court would appoint a Testamentary Trustee pursuant to the Testamentary Trust language in the Will. The Trustee would operate pursuant to the Testamentary Trust provisions, which normally state that the Trustee can pay for any bills related to health, maintenance and welfare of the children through the age of minority, as well as with distribution of principal amounts at ages set forth in the Will.  If you wish for your children to receive distributions of principal at specific ages (i.e. 25, 30, 35), we can draft a Testamentary Trust with “sprinkle provisions.”  The principal is then “sprinkled” in over a period of years rather than your children receiving a lump sum distribution at one age.

The parents may also consider a Living Trust with provisions for adult children similar to those described for the Testamentary Trust.  A Living Trust is a contract that is independent of Probate Court jurisdiction, and it therefore streamlines the work considerably.  Normally, a Living Trust is utilized when the Successor Trustees are persons who the parents trust with the proceeds from their estates.  Again, the guardian would be suggested in the Will and appointed by the court over the person, but there is limited ongoing court contact with the guardianship over a person as opposed to a guardianship over an estate or a Testamentary Trust administration.

The foregoing stages of planning should give you an overall idea of when it is important to see your financial and/or estate planner for purposes of creating and/or updating your estate plan to achieve the maximum amount of income tax, estate tax, and unnecessary governmental interference.

Contact R.F. Meyer & Associates today to schedule an appointment to discuss your estate planning needs.

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