Sending the kids off to college may leave parents with an empty nest. But they have more to think about than whether to turn Junior’s bedroom into a home gym. Parents with college-bound kids also have some important estate planning decisions to make.
Review Current Estate Planning
Things change after your child turns 18. Major life events, like having a child leave home for any reason, should trigger a review of your estate plan.
For one thing, a parent’s Will typically names a guardian to care for any children who are minors. At 18, children typically do not need a guardian unless they have special needs.
By now, you probably have an inkling of how your son or daughter handles financial matters. Based on that knowledge, you may realize that it’s not a good idea to give them a large lump sum inheritance. While talking to your estate planning attorney, ask about adding spendthrift provisions to your Will or trust. A discretionary trust may also help because the trustee when distributions will be made to beneficiaries and how much. Staged withdrawals are sometimes used to make trust distributions because the beneficiaries receive periodic payments as opposed to lump sums. Taking these steps could prevent your child from squandering their inheritance.
As for your own estate planning, it’s never too early to start your planning for incapacity. For example, you can sign a durable power of attorney. It’s durable because the authority continues or starts if you become unable to handle your own affairs. The agent you name in your durable power of attorney can immediately start handling your affairs if you become incapacitated.
Legacy Planning for Parents with College-Bound Kids
As you approach retirement, your thoughts may turn to the intangibles you’ll leave behind. Writing an ethical Will is one way to touch your family after you are gone. This is not a legal document, but a letter in which you relate your beliefs, your personal history, the things you’ve learned from life, and the things you are proud of. Consider including this as part of your complete estate plan.
Another way to cement your legacy is to include at least one trust in your estate plan. A dynasty trust, for example, transfers your wealth to your children and for future generations. A charitable remainder trust lets you provide for a favorite charity while receiving an annuity that may help fund your retirement and reduce your current income tax liability. Trusts are complicated, so don’t attempt to establish one on your own.
Even Your College-Bound Kids Need an Estate Plan.
Make sure your children head off to college with an estate plan also. They may think it is unnecessary, but it will give you some peace of mind.
At Virtus Law, we have the experience and skills to analyze your current estate plan and make any necessary changes. Contact us by calling 612.888.1000 or by emailing us at firstname.lastname@example.org. Our main office is in Minneapolis, with other offices located in Maplewood, Cambridge, Edina, Mendota Heights, and Red Wing.