Estate planning is essential to protect your family’s future, especially if you have children. Having a plan in place before the unexpected occurs can make an otherwise stressful situation more manageable and ensure the best possible situation for your family. Depending on your children’s ages and needs and the size of your estate, though, different solutions might be the most appropriate way for you to leave money to your children. The following are some options to consider.

Establish a Trust

In many cases, especially if your children are minors or have special needs, a trust is an excellent way to provide for them, establish specific guidelines for the distribution of your assets, and protect their interests. It’s important to understand the different types of trusts that are available to pick the one that’s most appropriate to your specific situation. 

Revocable Trust

Also known as a living trust, a revocable trust sets out in writing what you want to happen to your assets in the case of your death. You maintain control over all assets you place in your living trust throughout your lifetime and can make changes and updates as needed. The main advantages of a revocable trust are that you can avoid the lengthy and expensive probate process and can have a trusted friend or family member manage the assets if you are incapacitated. 

Irrevocable Trust

An irrevocable trust, comes in many forms, one of the most common is known as a life insurance trust.  An irrevocable trust cannot be changed once it is established but it can offer significant tax savings and asset protection for your family. If you have a large estate, an irrevocable trust might be a good choice. 

Special Needs Trust

If you want to provide for your child’s special needs without affecting their eligibility for government-funded benefits, consider establishing a special needs trust. This type of trust allows you to designate a trustee who will manage the funds on your child’s behalf, ensuring their standard of living and care are properly maintained.

Set Up A College Savings Account

For older children, many parents choose to set up college savings’ accounts like 529 Plans to help cover future educational expenses. Assets in this type of account are excluded from annual gift taxes and estate taxes, however, your children must use the funds for educational purposes to avoid penalties, which makes them somewhat limited.

Designate Them as a Direct Beneficiary

Minors cannot receive assets directly, so you should only make your children direct beneficiaries if they are adults. Many legal documents – a will, insurance policies, retirement accounts, and bank accounts – require you to designate a beneficiary to receive the assets after your death. Designating your adult children as your direct beneficiary in these cases can be an effective way to pass on wealth. Just remember to go over your accounts and update them regularly. 

Consult with Estate Planning Professionals 

At Lonich Patton Ehrlich Policastri, we believe that estate planning should not use a one-size-fits-all approach. Instead, our Estate Planning Group works closely with every client to address their unique situation, needs, and wants. Our estate planning experts offer a full range of legal services, including setting up trusts and preparing wills. Call us today to schedule a free, no-obligation consultation to discuss your options.

Disclaimer: this article does not constitute a guarantee, warranty, or prediction regarding the outcome of your legal matter.