Estate Planning and Providing for Your Children

Parents throughout the Summit area want to make sure that their children will have the financial resources they need in the future, even if those parents are not physically here to provide for them. New Jersey has many different estate planning options that can allow individuals and married couples to make financial plans for their children, from establishing trusts to naming their children or the person the parents have selected as a guardian to be the beneficiary on accounts and insurance policies. Consider some of the following ways of providing for your children through estate planning.

Leaving Assets to Your Children in a Will 

You can leave assets of your choosing to your children through your will. It is important to understand that these assets will be handled differently from assets left to an adult, however. Depending on the circumstances, it may be necessary for the court to appoint a guardian to manage any assets left to the child through a will.

Designating a Guardian as a Beneficiary 

On life insurance policies, you can designate a person you have trusted enough to name as your preferred guardian for your children as the beneficiary of your life insurance policy or policies, so that they can use these proceeds to provide for your children financially. You can also create payable-on-death beneficiary designations for various types of bank accounts, which can allow the assets in those accounts to pass to the beneficiary upon your death without going through probate.

Irrevocable Minor’s Trusts and Other Trusts for Your Children 

There are various types of trusts in New Jersey that you can create in order to make sure that your children will have their financial needs met. For minor children, you may want to consider an irrevocable minor’s trust. With this type of trust, you can secure assets for your child in the future, and you can clarify how and when the child will have access to the funds in the trust. Spendthrift trusts, and other types of trusts, can also be set up for adult children for whom you want to provide financially, but may not trust the child entirely to spend the funds wisely.

If you have an adult child who is disabled, you should also consider a special needs trust (SNT), which can allow you to provide financially for your disabled child without impacting your child’s eligibility for benefits such as Medicaid and Supplemental Security Income (SSI).

Reviewing Your Estate Plan When Your Children Reach the Age of Majority 

Once your children reach the age of majority, if not before, it is important to review your estate plan. Some of the plans you might make now to ensure that your children have financial support may need to change once you can directly leave assets to an adult child.

Contact a Summit, New Jersey Estate Planning Attorney 

If you have minor children, the estate planning tools described above are essential to discuss with one of the experienced Summit estate planning attorneys at Dempsey, Dempsey & Sheehan. Our firm routinely assists parents and families in New Jersey with estate planning, and we can discuss all of your options with you today that can allow you to provide for your child’s future financial needs.

Sources:

law.justia.com/codes/new-jersey/title-3b/section-3b-31-34/

nj.gov/humanservices/dmahs/clients/SNT_regulations.pdf