By: Chad McCoy
So have you ever thought about what happens when you die? No, I don’t mean the “BIG QUESTION” about afterlife; I mean the practical question of “What’s going to happen with my stuff? What about my kids?”
Most states have a set of “default” laws – called the laws of intestacy – that govern the flow of real property (i.e. land) and personal property when a person dies. However, most states also have a set of laws based loosely on an ancient English law called the Statute of Wills that allows you, to some extent, to control the flow of real and personal property on your own.
When you start to think about your will I always like to draw a family tree and then, and here is the morbid part, start “killing” people and see where the property/money goes. If you have children, you will very quickly see that your kids might end up owning a lot of property at a very young age.
To prevent 18 year olds from becoming rich overnight, I suggest you think about creating a simple trust in your will. With a trust, you get to choose a competent adult to be in charge of your money and saddle them with the legal obligation to take care of your kids financial needs with that money. It’s important to choose someone you can trust and it’s also important to plan for the future and choose a number of alternative trustees in case your first choice passes away before you.
A trust also offers flexibility and control. For example, with a trust in your will, you can leave money for the benefit of your children until they turn 25. Or, you could leave it in a trust until they get a college degree or maybe even until they accomplish some other task like climb Mount Everest. In other words, you can incentivize your children and make sure that you are not simply leaving money behind that will be consumed. I frequently draft wills that leaves the money in trust until the child is 25 or earns a college degree, whichever is first.
Another consideration is who would you choose to guardian of your children? This will be the person who is in charge of where they live – and it can be someone different from the trustee in charge of the money. Obviously, you will want to choose someone that you feel comfortable will take good care of your kids, has the room and means and willingness to do so.
Finally, you should think about who will be in charge of your will – the person that will serve as the executor or executrix. They do not have to be a beneficiary and do not have to be related. In fact, it may be better if they are not.
So, before you hire an attorney to draft your will, ask yourself the following questions:
1. What do I own?
2. What do I want to happen to it when I pass?
3. Would I want my kids to have it all at a young age, if not, at what age or stage of life?
4. Who will be in charge of my child’s money?
5. Who will have custody of my children?
6. Who will be in charge of my will and make sure my wishes are done?