This week marks the one year anniversary of the Law Offices of Kristen R. Gross, P.C. What a great year it’s been! I wanted to take a moment to express my gratitude to my colleagues, attorneys, financial advisors, CPAs and insurance specialists, who provided guidance on starting my own business and referred me to their clients. Thank you to my current and former clients; the opportunity to work with you, your family members and friends are the highest compliment. This weekend as I reflected on the firm’s first birthday, I read a practical article for parents entitled “For Parents-to-Be, a Few Financial and Legal Tips.” Estate planning is hugely impacted by life’s changes. In the upcoming weeks, I will be posting a blog about estate planning and divorce.
Today, however, the topic concerns another huge life changer…having children. For many this is the catalyst for doing their first estate planning documents. One could argue that having children forces us to become adults ourselves. The NYT article imparted a lot of practical advice about what to do prior to the baby’s arrival and then soon after. The article recommended that both parents purchase life insurance, even if one plans upon staying at home. Remember, even if one spouse is not currently contributing an income because he or she chose to stay at home to care for the family, his or her death will likely result in the need for an outside caregiver for the children. The article further recommended that women apply for life insurance prior to becoming pregnant or in the early stages of their pregnancy, since medical complications during a pregnancy can delay an insurance company’s decision to insure them until after the pregnancy. Feel free to contact the Law Offices of Kristen R. Gross, P.C. for a referral to an insurance specialist.
You should create a will which names guardians in the event that you should pass away. The Michigan courts will give great deference to a parent’s written document. Additionally, in Michigan, if you have minor children, you should create a revocable living trust and appoint a trustee who could manage your child’s assets in the event that you pass away while they are minors. Minors cannot inherit assets over a certain dollar threshold, therefore, if assets are left directly to the minor, then it will be necessary for the court to establish a conservatorship for the minor’s assets, which terminates at the age of 18 in Michigan. Most of my clients object to idea of even having an 18 year old inherit a significant sum of money and would prefer to have someone else control it for their child’s benefit. (I speak from experience, since I have an 18 year old.) A trust can be set up for your child which could provide for their health, education and everyday needs. Most clients establish ages at which they would like to distribute the assets to the child, but others prefer to condition a distribution on attaining a college degree or some other incentive plan. Whatever you choose, the idea behind this strategy is that you control the purse strings even if you are already gone and that’s an idea that brings comfort to many clients even when they have to deal with such difficult issues.
Once you have created a trust, make sure that it gets funded with assets. That means you need to update your beneficiary designations so that your trust is a named beneficiary. Thanks for reading!