The traditional family structures in which most of us grew up are gone… forever. And, with them, so, too, is traditional estate planning.
With soaring divorce and re-marriage rates, unmarried partners, and children from more than one marriage, many people are both step-parent and co-parent. If you’re one of them, your estate-planning decisions must account not only your biological children, but also any step-children and new spouses. Unfortunately, even the best-intentioned parents can unwittingly make mistakes that put themselves and their families in jeopardy.
Sometimes, when aging parents name an adult child as a signatory on an account, the child is often named joint owner rather than co-signatory. And this can cause major problems.
If the child is named in a lawsuit, for example, the assets could vanish. And adding only one child to an account could cause tremendous family conflict with other children.
An adult child who’s a joint account-owner (with a parent) usually receives all assets upon the parent’s death. But if the parent’s intention had been to provide for more than one child…the others lose out. (However, attorneys usually don’t…because the family will probably end up in court!)
If you want more than one child to receive assets, you may need a trust naming the specific children as beneficiaries.
Parents should think carefully before naming a child as the beneficiary of a retirement account, insurance policy, or other asset. If the child is a minor, for example, the court may appoint a guardian. You might also forget to update beneficiary forms to account for new children, whether through birth, adoption, or re-marriage.
Divorced parents are yet a whole different issue. They should review designation changes with an estate planning attorney, to ensure that assets intended for children or a new spouse don’t end up with a former spouse. Remember – a will disinheriting a former spouse is not legal if the beneficiary designations haven’t been changed!
This is the easiest way to really screw up your loved ones – and your legacy. If you put off creating an estate plan, or if you don’t update your plan to address children’s inheritance issues, you can pretty well bet that your wishes will not be carried out.
Parents of minor children should also remember to address guardian appointment in their estate plans. Would you like to decide who will care for your children? Or would you prefer that a court decide?
A comprehensive estate plan can help families address important issues, ensure loved ones are provided for, and minimize the chance of conflicts that can split apart your family forever.
In this type of planning, one size does NOT fit all! A first-time parent has much different estate-planning needs than one with adult children. An aging parent with adult children, however, won’t be concerned about guardianship. But they will be concerned with balancing the preservation of assets for their children with the fact that the assets may be depleted by their own healthcare needs.
It’s a good idea to discuss these issues with your friends who are parents; you might get new insights. And then, of course, you’ll need to discuss an estate-plan review with an Elder Law attorney. Regular plan reviews are important, of course. But if your marriage- or parenting status changes, don’t wait for a “regular review.”
Address your concerns now…before they become issues with which your children will have to wrestle after you’re gone.
It’s complicated stuff. And often, not easy to discuss. But the alternative will be dying without having your wishes fulfilled. And perhaps splitting apart forever the family that you loved.
