One of the Problems We See at the Law Office: Estate Planning for Young Children

Testamentary Trusts and POAs

Your husband is working late so you get your daughter from the baby sitter and stop at the store for groceries.  You see a cute baby riding in another grocery cart holding a doll.  She looks up and asks her mother, “Should I have a Will for my baby like you have for me?”

After supper and when things get quiet you mention the Will thing to your husband.  But his droopy glazed eyes are locked on the TV screen and he seems to sleep through your attempt at conversation.  The next day at work, you hear the term Testamentary Trust for Minors.  You think of yourself as a good parent, but is there something others know that you do not?  Is there something Mom did not know or mention?  Maybe so.  So you email your local attorney and set an appointment.

You tell the attorney that you are not rich, that you and your husband have good potential as your jobs and careers progress, but all you have now are debts and life insurance.  And a baby.  You do not expect to die any time soon.

The attorney agrees that death is not very likely, and even disability is fairly low on the probability scale.  But if anything happens, then a Will can be very useful.  And so can a Durable Power of Attorney.  He reports that many families do execute Wills which include provisions to protect children.  One clause can be used to give a responsible adult authority to care for your babies if you suddenly die.  A second set of clauses can give a responsible adult power to collect and use your life insurance proceeds for the care of your babies.  The clauses are often called a Testamentary Trust; “Testamentary” because they are part of a will, and “trust” because they give someone control of your property for the benefit of a third person, your child.  A Durable Power of Attorney can give your spouse or another responsible person the authority to act on your behalf to help make decisions with your financial affairs in case you are incapacitated in an accident or by some other disabling event.

The attorney smiled and said, “I sometimes tell my clients that if we help you sign these forms, then you will be guaranteed to never need them.  If we do not, then you will need them the next day.”  So you decide to proceed and avoid the risk of needing them when it is too late.

Witte Law Office

6125 Havelock Ave
Lincoln, NE 8507
402-467-5080
glen@wittelawoffice.com

 

Blended Family Trust

Blended Family Trust

Your husband died leaving you with two grown children but who still could use more advice than they ask for, especially in financial matters.  You have saved the life insurance proceeds from your deceased husband and wish to preserve it for your children.

You have recently grown to love another man who has three children.  You both have good jobs and share many interests.  You and he share the same goals for saving for the future and in reducing debts on cars and the house.

You contemplated a prenuptial agreement, but your impression of the “standard form” that you found on-line does not provide the flexibility you hope to keep.  You want to be able to change the deal if circumstances change as you think they could.  Yet there are parts that you want to keep as firm and inviolate as possible.  You certainly want to be protected in the event he dies and you want him to have the benefit of what you and he accumulated together in case you die.  But you do want your children to get what you preserved of their father’s estate.  Things like Augmented Estate and Elective Share may be a great benefit for some surviving spouses but those rules seem too arbitrary for your taste.

Knowing that your wishes were partly selfish and partly very generous, you sought the advice of a local estate planning attorney whose website indicated an awareness of the problems.

At the appointment your attorney spent a little time asking questions, a lot of time just listening, and only occasionally making a remark or two to help verify that he understood your meaning.  When you and he were both confident he understood your wishes and desires, he offered suggestions.

The attorney suggested that a trust would provide the best tool to accomplish your goals.  He reported that trusts come in many shapes and sizes, that the agreement will be enforced by the probate courts and sometimes by divorce courts, that it is important to state clearly what you want, and to be cognizant that choosing one option forecloses other options.  Each option has its costs, he reported, but there is no “right” choice.  Every person has a different set of priorities, so every trust should be written a little differently.

After the attorney’s review with you of the options that your choices seemed to give up, you felt better and assured him that you felt reaffirmed in your choices.  He thanked you for your clearheaded decision.

The next week, the attorney reviewed with you his clearly written trust agreement and you found that you understood what the instructions would mean in varying circumstances.

That evening your fiancé thanked you for making his life so much simpler and for making it easier for the step-children to like their new step-parents.

Witte Law Office

6125 Havelock Ave

Lincoln, NE 8507

402-467-5080

glen@wittelawoffice.com