In my twenty plus years of experience
in the area of wills, trusts, probate, and guardianships, I have seen the heartache of the survivors many times when parents
did not take the time to plan. For example, in one case, the minor child of a deceased single mother was shuttled from
household to household every few months when she became unmanageable and when the court-appointed guardian (“guardian
of the person”) fought with the court-appointed conservator (“guardian of the property”). All
of this could have been avoided had the mother simply executed a valid will appointing guardian of and trustee for her child.
Often, I also see estate plans from
office supply stores, software, or the internet that set up guardians and even trusts for minor children, but distribute the
child’s assets outright to him or her at age 21. Now, I ask you (and myself), is it a good idea for someone to get hundreds
of thousands, perhaps millions (with life insurance), of dollars all at once at age 21? What a great party I would have had
if that had happened to me, but I’m not sure if anything would have been left to take care of my future needs.
At our law firm, we find that the
largest stumbling block for parents of young children in completing their wills is the choice of guardian and trustee. Either no one (understandably!) lives up to the parents’ standards, or Mom and Dad cannot agree
on the best choices and backups.
Our advice is this - make the decisions, even if one parent must compromise more. The
reason this is so important is because you know what is best for your child better than a court does. If
parents do not make a designation and both parents die or become disabled, more than one extended family member may think
he or she is the best choice. In such a case, the decision is left in the hands of the court. This is a shame, considering that a written designation by a parent takes precedence and can avoid
this situation altogether. Plus, you can always change your will later if you want to
change your guardians and trustees.
Picking a guardian to raise children in the event that both parents die or become disabled is a tough choice for any
parent to undertake. After all, a lot is at stake, and the possibility of such a situation might seem unlikely. Try to think of choosing a guardian for your children as if it were any other decision, like refinancing
your mortgage, and approach it methodically.
Here are some questions that may help:
· What is
the background of the person(s) being considered (family, friend)?
Are they financially secure?
· How old
· Are they responsible enough?
Where do they live?
· Do they
already have children? Ages?
· If they don’t have kids, are they capable of raising children?
· Do they
have time to raise children?
· Are they healthy?
· What are their views on education? Other cultural/social/religious/belief system issues important
to you and your spouse?
Picking a trustee can be equally daunting.
Sometimes the guardian and trustee can be the same person if the guardian is financially responsible and you have no need
for “a second pair of eyes”. Otherwise, you may want to consider a different individual, or even an institutional
trustee such as a trust company, bank trust department, or law firm. The trustee should know that the job is to provide
for the child’s welfare (e.g., health, education, maintenance, and support) and to make discretionary distributions
to the child when appropriate. However, it is important for the trustee to know when to decline a request for
a distribution by the child or guardian if granting the request would be unwise.
A properly drafted will with a testamentary trust for minors
addresses these and other issues and can give families, young and old, large and small, something priceless – peace
Probate in Colorado is relatively simple and inexpensive. In fact, for a living trust, a lawyer might charge you
5-6 times what probate fees would be. A will is often a better, simpler, and less expensive centerpiece for an estate
Living trusts are an important estate planning solution in the right situation, such as when a client has real
property in another state, when a client desires complete privacy, or when a client needs financial mangement of his or her
assets by an institution (e.g., bank or trust company) in case of incapacity.
However, if you don't fit one of the above
situations, it is doubtful that you really need a living trust. And, contrary to what you may have been told, living trusts
really have nothing to do with taxes vis-a-vis wills.
Don't be a sucker for a lot of expensive legal paper -- call
us today to see if you really need a living trust.
In my 20+ years of experience in both insurance and estate planning, I've seen one commonality with both: people
often don't get around to getting it done until it is too late.
Anything can happen in life, as we've seen
in Boulder County these last few days. If someone depends on you, get life and disability insurance, put an effective estate
plan in place (wills, powers of attorney, advance directives, beneficiary designations). Your loved ones deserve it.
Yesterday, the sun finally came out. I thought to myself, "This is what Noah and his family must have felt like
at the end of the 40 days."
Friends and clients, Hofgard & Associates is going strong and ready to assist as
we all rebuild. Our off-site facility for safekeeping estate planning documents is high, dry, and completely undamaged
by the floodwaters. Please let us know if we can help, either by calling or dropping by our office at 1510 28th in Boulder.
Though the bike path 100 yards away is 10 feet under Boulder Creek, we're fine here.