Today more families consist of a single parent and one or more children. An important issue to be addressed by the single parent is estate planning. If a person dies intestate, without a will, their estate passes to their children. If the children are minors, then the estate is controlled by the parent or guardian of the child. Estate planning allows the single parent to specify what is done with his or her estate. Estate planning can include a trust, a will, both or neither.
Lets say a single father dies leaving two children and a $50,000 life insurance policy, owns some stocks, a house and a car. The father named the children as the beneficiaries of the policy and has no will. Since the children are under the age of 18 they cannot control the monies from the life insurance policy. The house has to be probated and depending on the amount of equity in it, probate can be simple and short or extended. The children’s mother or guardian controls the monies from the insurance policy and the estate. In theory she can do whatever she wants with the money so long as she says it is for the best interest of the children. If the father wanted the money used for college and the mother uses it to buy the child a car at 16 there is nothing that can be done.
The father’s best option is to put the proceeds of the life insurance policy, the house and any other assets such as stocks into a trust with the trustee being a person he trusts. The father can specify that the monies can only be spent on a college education or whatever other purposes the father deems proper. The trustee will have the option of deciding what to do with the house, it can be sold or kept and rented out until such time as the children need the money. The same can be done with the stocks and other assets.
Estate planning, properly prepared and executed can give peace of mind to the person making the estate plan and make life easier on his heirs. If you have any questions, please do not hesitate to contact us.