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There are 5 simple but effective ways to protect your children in the event of your death.

   1.  Name a guardian. Who will raise your children if you and your spouse (or the non-spouse other parent) are deceased? If you don’t have a will, the court will choose someone. This court
appointed guardian may be different than whom you would have selected and in fact may be the last person you would have selected to raise your children. In a will you can specify the person you wish to raise your children. This is such an important issue that it justifies a will even without considering any of the other numerous benefits.

   2. Create a trust for your children. Few parents want their children to receive significant amounts of cash or property at age 18. Unfortunately, without proper planning, this is exactly
what happens when children receive an inheritance. If, for example, the child wants to buy a sports car instead of going to college, there is nothing you can do about it.

With a Revocable Living Trust, you can specify that the child’s inheritance shall be used for general support of the child and to pay the child’s college expenses. You can also specify that trust assets may be used for other specified purposes such as to purchase a home or start a business. Then, when the child reaches a specified age, 25 for example, the trust is terminated and the child receives the remaining trust assets at a time when the child is more financially
capable.

   3. Avoid family discord with proper planning. Serious and permanent sibling rivalries can arise if parents do not have a will or trust that clearly specifies who is to receive what. If you die without a will or trust, the law decides who receives your property.  When parents have a will or living trust, family discord is usually minimized.

   4. Lifetime transfers.  Depending upon your financial needs, transferring assets to your children either outright or in trust during your lifetime may be advisable. Benefits of lifetime transfers may include reduced estate taxes, reduced income taxes, and an excellent college savings vehicle.

   5. Life Insurance. If you have minor children and you don’t have life insurance, you may want to consult with an experienced life insurance agent or financial planner.  If a parent dies and there are minor children, there may not be sufficient financial resources to raise the children. Even a modest $100,000 policy would make a significant difference to your child’s future. Also, life insurance could finance a child’s college education.  A qualified life insurance agent should be able to assist you.

If you already have life insurance it is often advisable not to name your minor children as the primary or secondary beneficiaries. As discussed above, it is normally advisable to have the life
insurance proceeds paid to a trust and not to the children to avoid the children receiving the insurance money at age 18.

The Law Office of Raymond B. McFalone
Call or email us for a free estate planning consultation!

Raymond B. McFalone
1990 N. California Boulevard, Suite 830
Walnut Creek, CA  94596
Phone: (925) 944-1438
Fax: (925) 932-8616
 

Email: ray@raymcfalone.com