Join our newsletter.

Where Most Estate Plans Fail. You Will Be Shocked!

You have a Will! Congratulations. You are in the minority in the United States. Some surveys show that only 39% of people in the United States have a Will. When we look at the age bracket of 18-35 the percentage drops to 9%.

A Will is a documents that expresses your wishes as to who will receive your property when you die. Parents can also use this document to name a guardian for their children if both parents are dead. At Penglase & Benson we put a standard clause in that will create a Trust to hold all money and property being passed down to a minor if the minor is to receive the gift and be too young (in the parents eyes) to make good financial decisions. We usually have our clients break the gift down to thirds so that the child will receive a portion of their gift at three different ages as they grow up. A popular split is to have the child receive a portion of their inheritance at ages 21, 25 and 30. This ensures that if the child makes a bad financial decision, it is limited.

The 39% of have Wills probably think they have done all that they can to protect their children’s inheritance. They would be wrong. Most families have the vast majority of their wealth tied up in life insurance and retirement accounts. These financial vehicles contain beneficiary clauses in them that require the company to pay the benefits to the named beneficiary at their time of death. These monies pass outside of probate and are not controlled by the Will. The majority of the 39% of Americans who have Wills have not accounted for this. As such, for most, if they die and a spouse is not still living, the money will be paid to the child. The question becomes, how do we protect this money?

Most Courts will prevent the money from being paid directly to the child. The Court will impose a Trust on the money and protect it until the child is 18. The problem is that the Court, and not you, will choose the Trustee (probably a corporation) who will charge a fee for this service (less money for the child). Furthermore the child can then have all of the money at the age of 18 (were you financially responsible when you were 18?). As an added bonus the court imposed Trustee will not know of or share in your financial philosophy and cannot pass that on to your child.

Enter the solution. For our clients who have children we recommend a stand alone Trust. With the establishment of a stand alone Trust you can pick who will be the trustee and when the money will be distributed to your children. You can then name the Trust as a secondary beneficiary. In this case the life insurance or retirement account will pay directly to the Trust bypassing the child and eliminating court involvement or oversight.

Speak to an attorney at Penglase & Benson to review your estate plan to ensure that your children are protected.

Related News & Articles

An Amicable Divorce with a Happy Ending Is a Real Possibility As it happens, it’s possible to have a relatively happy ending where divorces are concerned. This is what’s known as...

Most insurance companies for the tortfeasor (the person, persons or company who caused your injuries) will not automatically pay medical bills as they occur. There are many reasons for this. One...

Your lawyer will discuss the payment of your medical bills in detail with you. In summary, your medical bills may be paid by one or more of the following methods: a....

Your thoughtfully constructed estate plan could be disrupted by a challenge from a relative or friend who is unhappy with his or her inheritance (or lack of one). Here are 13...

The concept of alimony has been with us for centuries. It’s older than the Roman Empire, predates the birth of Socrates and Aristotle and had been around for 1,000 years at...

You’ve probably heard the term “amicable divorce” more than a few times throughout your life. “Amicable” is a word that often appears in news stories when celebrity couples decide to break...

It’s rare that we hear divorce described in a positive light. We use terms like “messy divorce,” “ugly divorce,” “painful divorce.” Then again, why shouldn’t we? The collapse of a marriage...

If you’ve been involved in an auto accident, a work-related injury, a fall in a public or private place, or if you’ve been exposed to an injury or disease as a...

Writing a will is one of the basics of estate planning. It’s also something 40 percent of us avoid doing. And on some level, we can understand that. Writing a will...

Facing a criminal conviction or sentence in Pennsylvania can be an unpleasant experience, to say the least. However, remember that the legal system allows for a second chance through the appeal...