There were a couple interesting articles in the Wall Street Journal recently regarding estate planning. The first article deals with the implications leaving your heirs different amounts in your estate plan. People leave different amounts to different heirs for a variety of reasons - one heir may be more successful than the others and thus have a perceived lack of need for additional money; while another heir may receive less because they live out of town and aren't as actively involved in their loved ones lives due to the physical distance.
The article cautions individuals to make sure any disparate treatment of heirs is based on sound reasoning and not spite. Individuals should view their estate plan as a legacy they want to leave to their heirs and should be think about what potential unequal distributions could do to future family discord.
The best way to avoid this problem is to have good communication with your heirs about the division your estate. This will take away the element of surprise after your passing and will often put your heirs at ease.
The second article deals with who will take care of your minor child or children if you pass away. Frequently, couples with minor children are hesitant to draft an estate plan because they are early in their careers, have a sense of immortality, and may have little disposable income. However, it is at this time that having an estate plan is imperative.
First, while couples with minor children may not have a lot cash on hand, they tend to have a significant amount of life insurance. In these situations, if something happened to both parents, the life insurance would pay to the minor children. However, since the children are minors, their share of the insurance proceeds will be tied up in probate court until they reach the age of 18. Upon attaining the age of 18, the court turns over any remaining monies to the children outright.
There are two problems with this:
1) by having the money tied up in probate court, the family will incur years of attorney fees; and
2) when the child reaches the age of 18, they will receive outright whatever is left. The child can then use the money as they please.
Both of these problems can be avoid through proper planning and the use of well crafted estate planning documents.
Second, who will take care of your minor children in the event of your passing? The article gives some helpful pointers for choosing who to appoint as guardian of your minor child. For example, you may want to consider that while grandma and grandpa are good guardians now, they may not be in ten years as they age.
You can appoint a guardian of your minor children in your estate plan. If something happens to you, the court will place great weight on your wishes so it is important that the appointment of a guardian for minor children be a part of any estate plan where minor children are involved.