If you and your spouse or partner recently welcomed a new child into your California household, likely the last thing on your mind is estate planning. Nevertheless, you should not overlook this very important aspect of new parenthood.
As reported in Kiplinger, you and your spouse or partner now both need to make a Last Will and Testament in which you designate, among other things, the person(s) who you want to raise your children in the event that you die before they reach their respective ages of majority.
Estate planning vehicles
Your will, however, is only the first step of the estate plan you may wish to construct to benefit yourself, your spouse or partner, and your children. For instance, you may wish to establish one or more of the following:
- A special needs trust if one of your children has special needs that likely will last beyond your lifetime
- A school tuition plan for each child so (s)he will have the necessary funds to obtain a higher education when the time comes
- A minor's trust for each child that sets forth the age at which (s)he will receive the trust assets, as well as the person or entity who will manage the trust until that time
Trust asset ownership
Remember, none of your children can own any assets outright until they become 18 years old. Consequently, establishing trusts for them solves this problem. Even though you name your various children as beneficiaries of your various trusts, this does not mean that they own those assets. Rather, the respective trusts do. But you can, if you wish, word your trusts in such a way that your designated trustees can spend trust income for your children's benefit prior to their attaining the age of majority.
This is general educational information and not intended to provide legal advice.