Klitzman Law Group, PLLC

What Is Probate?

“How this is handled now depends on the plans the deceased made when they were alive. For some people, that might mean probate.”

Unless they’ve experienced it themselves, most people don’t know what happens after the funeral is over and mourners return to their lives. A recent article from San Francisco Bay Times, “Probate in a Nutshell,” explains how the probate process works.

Probate is the legal process of administering the estate of a deceased person. It includes transferring assets of the decedent to their heirs, beneficiaries, or creditors. Probate is court-supervised and can be a lengthy, complex and often stressful experience, depending in part on the complexity of the estate and the jurisdiction.

Probate starts with filing the last will and testament in the court and appointment of an executor. If there is no will, then the court appoints an administrator to handle the estate. The executor or administrator gathers the assets, pays debts, and taxes and distributes the remaining assets according to the terms of the will. If there is no will, the laws of the state determine, usually by kinship, how the assets are distributed.

The probate process can take months or years to complete. During this time, the executor or administrator must keep careful records of all transactions. They must also file tax returns for the last year of the person’s life and diligently track all expenses and income of the estate.

Once the probate process is completed, the executor or administrator must file a final report with the court. This report must include all financial transactions. The probate court then reviews the report and determines whether or not it approves all transactions. Only then can assets be distributed to beneficiaries.

Why is probate so complex and time-consuming? First, it takes time to complete an inventory of someone’s property, including real estate, bank accounts, investment accounts, artwork, vehicles, jewelry and tangible assets. The asset list also includes life insurance policies, pensions, annuities, and other assets the person owned.

A professional appraiser may be needed to determine the value of assets. The executor must also gather proof of ownership for all these assets, such as deeds or titles.

Any debts or liabilities must also be identified, including credit cards, loans, mortgages, liens, and outstanding debts. Finally, taxes must be reviewed: income tax, property tax, estate tax, or gift tax.

Finally, a complete list of all estate beneficiaries must be prepared, including family members, friends, or others who may be named in the will. Contact information will be required for all.

Many complications can arise during probate. This is why many people take the time to have an experienced estate planning attorney create an estate plan to remove assets from the probate estate through trusts, gifts and other estate planning strategies. Of course, estate administration still needs to take place after someone dies. However, having an estate plan can minimize the court’s involvement, cut down on delays and avoid unnecessary expenses.

Reference: San Francisco Bay Times (April 4, 2023) “Probate in a Nutshell”

What Elements are Overlooked in Estate Plans?

“There are certain provisions that people often forget to put in a will or estate plan that can have a big impact on a family.”

When creating an estate plan, there are details which seem minor but are actually very important, says a recent article from mondaq, “Four Provisions People Often Forget To Include In Their Estate Plan.”

Don’t forget to name alternative beneficiaries and executors. If the will names a beneficiary but they are unable to take possession of the property, or they are deceased, the asset will pass as though you didn’t have a will at all. In other words, the state will determine who receives the property, which may not be in accordance with your wishes. If there’s an alternate beneficiary, the property will go to someone of your choosing. A backup executor is also critical. If your primary executor cannot or does not want to serve, the court may appoint an administrator.

Personal possessions, including family heirlooms. Most families have items with great sentimental value, whether or not they have any financial value. Putting a list in your will makes it very difficult if you want to change your mind over time. It’s best to have a personal property memorandum. This is a separate document providing details about what items you want to give to family and friends. In some states, it is legally binding if the personal property memorandum is referenced in the will and signed and dated by the person making the will. A local estate planning attorney will know the law for your state.

Even if this document is not legally binding, it gives your heirs clear instructions for what you want and may avoid family arguments. Please don’t use it to make any financial bequests or real estate gifts. Those belong in the will.

Digital assets. Much of our lives is now online. However, many people have slowly incorporated digital assets into their estate plans. You’ll want to list all online accounts, including email, financial, social media, gaming, shopping, etc. In addition, your executor may need access to your cell phone, tablet and desktop computer. The agent named by your Power of Attorney needs to be given authority to handle online accounts with a specific provision in these documents. Ensure the list, including the accounts, account number, username, password and other access information, is kept safe, and tell your executor where it can be found.

Companion animals. Today’s pet is a family member but is often left unprotected when its owners die or become incapacitated. Pets cannot inherit property, but you can name a caretaker and set aside funds for maintenance. Many states now permit pet owners to have a pet trust, a legally enforceable trust so the trustee may pay the pet’s caregiver for your pet’s needs, including veterinarian care, training, boarding, food and whatever the pet needs. Creating a document providing details to the caretaker concerning the pet’s needs, health conditions, habits and quirks is advised. Make sure the person you are naming as a caretaker is able and willing to serve in this capacity, and as always, when naming a person for any role, have at least one backup person named.

Reference: mondaq (March 16, 2023) “Four Provisions People Often Forget To Include In Their Estate Plan”

What You Need to Know When Making Your Will

“While many people think that estate planning is only for the wealthy, experts say that’s not the case.”

Contemplating your own mortality is not on anyone’s list of fun pastimes. However, having an estate plan is a gift to family members and is important whether you are wealthy or not, says a recent article from CNBC, “5 key things to know when you create a will and make other end-of-life plans.” Don’t be intimidated by the word “estate.” It simply means the sum of your possessions.

At its essence, your estate plan details whom you want to make decisions for you if you become incapacitated or when you die and who will inherit what you own.

Estate plans don’t need to be complicated. However, they do need to be done correctly, so working with an experienced estate planning attorney in your state of residence is essential.

Here are five key things to keep in mind as you start preparing your estate plan:

A will is never enough. The will is the foundation, identifying whom you want to receive certain property, naming an executor and naming a guardian for dependent children. However, some assets pass outside of the will, including retirement accounts, IRAs, life insurance policies and annuities. Any beneficiaries listed on these accounts supersede instructions in your will. Therefore, for example, if your ex-spouse is listed on the beneficiary designation and you never updated the document, they’ll inherit the account, regardless of how long you have been divorced.

Some 401(k) accounts require your current spouse to be the beneficiary, unless they legally agree otherwise. And regular bank accounts can have a beneficiary listed on a payable-on-death form. The same is true for brokerage and investment accounts.

If you don’t name a secondary beneficiary and the primary beneficiary has died, the assets will go into probate. Probate is the process by which the court distributes your estate. It can take months or years, depending on the state and the complexity of your estate.

When you create a will, you name an executor to carry out your wishes and administer your estate. This includes liquidating or closing accounts, distributing assets to heirs, paying debts and selling assets like your home. Make sure the person you name is willing to serve in this capacity.

Your estate plan should also include a Living Will, a document expressing your wishes for medical treatments you do and do not wish to have if you cannot communicate. In addition, a Power of Attorney is needed so someone you trust can handle your legal and financial affairs if you become incapacitated. A Health Care Power of Attorney lets someone of your choice make healthcare decisions.

Some assets get a “step-up in basis.” For example, it may be better to gift assets like stocks, bonds, or real estate to heirs after death. When these assets are sold, any increase from the so-called “cost basis” or value when the asset was acquired, and the sale price is subject to capital gains taxes. However, the heirs get a step-up in basis. The asset’s market value at your death becomes the cost basis for the heir. Any appreciation before that is untaxed. When the asset is sold, any gains (or losses) are based on the new cost basis. If you gifted these assets while living, they’d assume your original cost basis, which could lead to a big tax bill.

You may want to have a trust. For example, if you want your children to receive money eventually but not while they are too young to be responsible for a large sum, a trust can hold the asset. The trustee will make distributions according to the language of the trust. This lets you determine when your heirs will gain access to assets.

Don’t neglect to update your estate plan. Any time you have a significant life change, such as a birth, death, marriage, or divorce, you must review your estate plan. You’ll want to be sure your named executor is still the right choice and the guardian for your minor children is still the person you want to raise your children. If you move to a new state, you’ll want to consult with an estate planning attorney to be sure your estate plan is still valid, since estate laws are state-specific.

Reference: CNBC (March 19, 2023) “5 key things to know when you create a will and make other end-of-life plans”

What Is the Meaning of Step-Up in Basis?

“Step-up in basis, also known as stepped-up basis, is a wrinkle in the federal tax code that can help heirs avoid or reduce taxes on inherited assets.”

This aspect of the tax code changes the value—known as the “cost basis”—of an inherited asset, including stocks or property. As a result, the heir may receive a reduction in the capital gains tax they must pay on the inherited assets. For others, according to the recent article, “What Is Step-Up In Basis?” from Forbes, it allows families to avoid paying what would be a normal share in capital gains taxes by passing assets across generations. Estate planning attorneys often incorporate this into estate plans for their clients to minimize taxes and protect assets.

Here's how it works.

If someone sells an inherited asset, a step-up in basis may protect them from higher capital gains taxes. A capital gains tax occurs when an asset is sold for more than it originally cost. A step-up in basis considers the asset’s fair market value when it was inherited versus when it was first acquired. This means there has been a “step-up” from the original value to the current market value.

Assets held for generations and passed from original owners to heirs are never subject to capital gains taxes, if the assets are never sold. However, if the heir decides to sell the asset, any tax is assessed on the new value, meaning only the appreciation after the asset had been inherited would face capital gains tax.

For example, Michael buys 200 shares of ABC Company stock at $50 a share. Jasmine inherits the stock after Michael’s death. The stock’s price is valued at $70 a share by then. When Jasmine decides to sell the shares five years after inheriting them, the stock is valued at $90 a share.

Without the step-up in basis, Jasmine would have to pay capital gains taxes on the $40 per share difference between the price originally paid for the stock ($50) and the sale price of $90 per share.

Other assets falling under the step-up provision include artwork, collectibles, bank accounts, businesses, stocks, bonds, investment accounts, real estate and personal property. Assets not affected by the step-up rule are retirement accounts, including 401(k)s, IRAs, pensions and most assets in irrevocable trusts.

If someone gives a gift during their lifetime, the recipient retains the basis of the person who made the gift—known as “carryover basis.” Under this basis, capital gains on a gifted asset are calculated using the asset’s purchase price.

Say Michael gave Jasmine five shares of ABC Company stock when it was priced at $75 a share. The carryover basis is $375 for all five stocks. Then Jasmine decides to sell the five shares of stock for $150 each, for $750. According to the carryover basis, Jasmine would have a taxable gain of $375 ($750 in sale proceeds subtracted by the $375 carryover basis = $375).

The gift giver is usually responsible for any gift tax owed. The tax liability starts when the gift amount exceeds the annual exclusion allowed by the IRS. For example, if Michael made the gift in 2018, he could avoid gift taxes on a gift he gave to Jasmine that year with a value of up to $15,000. This gift tax exemption for 2023 is $17,000.

Reference: Forbes (March 28, 2023) “What Is Step-Up In Basis?”

You Can Avoid Unintended Consequences

“Although there is certainly no shortage of people with selfish or malevolent intent, a great number of estate plans that end in disaster are due to unintended consequences.”

The mistake can be as simple as signing a document without understanding its potential impact on property distribution, failing to have a last will and testament properly executed, or expecting a result different from what the will directs. Unfortunately, these unintended consequences are relatively common, says the article “Advice for avoiding unintended issues in estate planning” from The News-Enterprise.

The most common mistake that leads to unintended consequences is leaving everything to a spouse in a blended family. Even if children don’t have a close relationship with their stepparent, they’re willing to get along for the sake of their biological parent. However, when the first spouse dies, the decedent's beneficiaries are generally disinherited if the surviving spouse receives the entire estate.

If the family truly has blended and maintains close relationships, the surviving spouse may ensure that the decedent’s children receive a fair share of the estate. However, if the relationships are tenuous at best, and the surviving spouse changes their will so their biological children receive everything, the family is likely to fracture.

Using a revocable living trust as the primary planning tool is a safer option. An experienced estate planning attorney can create the trust to allow full flexibility during the lifetime of both spouses.  Upon the first spouse’s death, part of the estate is still protected for the decedent’s intended beneficiaries.

This way, the surviving spouse has full use of marital assets but can only change beneficiaries for his or her portion of the estate, protecting both the surviving spouse and the decedent’s intended beneficiaries.

Another common mistake occurs when married couples execute their last will and testaments with different beneficiaries. For example, if they’ve named each other as the primary beneficiary, only the survivor will have property to leave to loved ones.

An alternative is to decide what the couple wants to happen to the estate as a whole, then include fractional shares to all beneficiaries, not just the one spouse’s beneficiaries. This protects everyone.

Many people assume that if they die without a will, their spouse will inherit everything. Unfortunately, this is not always the case, and a local estate planning attorney will be able to explain how your state’s laws work when there is no will. Children or other family members are often entitled to a share of the estate. This may not be terrible if the family is close. However, if there are estranged relationships, it can lead to the wrong people inheriting more than you’d want.

Failing to plan in case an heir becomes disabled can cause life-altering problems. If an heir develops a disability and receives government benefits, an inheritance could make them ineligible. The problem is that we don’t know what state of health and abilities our heirs will be in when we die, and few will want their estate to be used to reimburse the state for the cost of care. A few extra provisions in a professionally prepared estate plan can result in significant savings for all concerned.

Estate planning is about more than signing off on a handful of documents. It requires thoughtful consideration of goals and potential consequences. Can every single outcome be anticipated? Not every single one, but certainly enough to be worth the effort.

Reference: The News-Enterprise (March 25, 2023) “Advice for avoiding unintended issues in estate planning”

Planning for Long-Term Care and Taxes

“Many families discover that trying to mitigate the cost of long-term care can conflict with another common retirement concern—reducing taxes for retirees and their heirs.”

Retirement brings about several risks including longevity, market risk and inflation, paired with two of the most common concerns of later life: the costs of long-term care and how to reduce or avoid taxes during retirement and upon transferring assets to heirs. These concerns are addressed in a recent article from Kiplinger, “Long-Term Care Planning vs. Taxes: Finding a Healthy Balance.”

Long-term Care Insurance (LTC) is recommended for individuals and families under age 65 with investable assets ranging from $1.5 million to $3 million. The limits on net worth and age are based on striking a balance between the coverage cost and what benefits would be received. The initial goal of LTC insurance to finance the cost of assisted living and skilled medical care has now become more of a hedge against the final bill for LTC than total coverage of expenses.

With the chance of needing to live in an elder care facility and the average stay of three or more years, plus the cost of skilled care, this is now a major reason for people declaring bankruptcy during retirement. LTC insurance was sold as protection, but as life expectancies with medical conditions have increased, so has the cost of care. As a result, premiums have skyrocketed, and benefits have been reduced.

Universal Life Insurance with Accelerated Benefit Riders is an option better suited for people up to age 70 with $3 million to $5 million in investable assets. The premiums are high, but the policies act as a multi-use tool, providing coverage and the opportunity for wealth leveraging for the next generation.

Accelerated Benefit Riders (ABRs) are a special kind of life insurance rider triggered by medical conditions allowing the death benefit of the policy to be advanced to the owner during their lifetime, often up to 100% of the policy’s face value, for funding an extended stay in an assisted living or skilled care facility.

Asset Protection Trust Planning is the focus for most Americans with a net worth of less than $2 million. This is where the pressure of the costs for skilled nursing care is felt more intensely. Those with fewer assets have more to lose and need protection more than the wealthy.

Self-settled wholly discretionary grantor trusts, which are irrevocable, are used to house certain assets Medicaid would expect families to liquidate or spend before approving benefits to cover the bulk of the cost. Certain provisions of irrevocable trusts can be changed depending on the state of residence, such as who the trustee is and who the beneficiaries are.

The trustee should not be one of the grantors of the trust, and there is a five-year look-back on the trust’s funding. For example, if a grantor needs long-term care five years after assets were moved into the trust’s name, other assets will be needed to pay for the care.

Families are encouraged to plan early—ideally, just before or in the early years of retirement. The needs of the family drive which assets are placed in the trust. However, not everything goes. For instance, placing IRAs or other qualified accounts into an irrevocable trust would be unwise because this would be a fully taxable event. Roth IRAs may be placed in a trust. However, then they would lose their Roth status.

Careful planning with an experienced estate planning attorney can establish a balance between maximizing protection and minimizing taxes.

Reference: Kiplinger (March 20, 2023) “Long-Term Care Planning vs. Taxes: Finding a Healthy Balance”

How Do Inheritance and Estate Taxes Work?

“Federal estate taxes were created in 1916, taxing estates valued at over $5 million. This amount changed to $50 million in 1932. In 1940, it dropped to $10 million, then $5, then $3. In 2002-2007 estates worth more than $2 million paid the tax.”

The federal estate tax has continued to increase. In 2023, the federal estate tax only applies to estates worth more than $12.92 million. For a married couple, the exemption is $25.84 million, explains a recent article from The Alliance Times-Herald, “Estate, Inheritance Taxes.” Some people believe there should not be a federal estate tax, since anyone with enough assets to pay it also has the resources to avoid paying it.

Every year, married couples can give away a large amount of tax-free gifts to other people, including family members. The annual gift tax limit is currently $17,000 per person, so a married couple may gift $34,000 in annual tax-free gifts, reducing the value of their taxable estate ad benefiting their beneficiaries.

Estate taxes can also be avoided through the use of trusts. Most trusts give the surviving spouse rights to the assets with no estate tax on the assets put into the trust. For example, the surviving spouse may draw income from the trust, live in the house, etc. When the surviving spouse dies, the trust assets are then distributed to beneficiaries.

A charitable trust names a charitable organization as the beneficiary of the trust assets. Assets in the charitable trust can include cash, stocks, real estate and other property. Extremely high-net-worth families benefit from the use of foundations to own assets.

A Family Limited Partnership (FLP) is useful, since it allows family members to pool assets and then shift them to other family members. This is commonly seen in privately held family businesses and agriculture. Assets in an FLP transferred to others are removed from the estate, with significant estate tax savings. They are also used as a strategy to transition family farms from one generation to the next. The older generation manages the operation at first, and the younger generation, over time, can take over the operation.

Six states are still collecting inheritance taxes, Pennsylvania and Nebraska among them. Inheritance taxes are not calculated on the estate’s total but on the amount paid to each person who receives something from the estate.

Inheritance taxes are levied on property inherited from parents, siblings, extended family and non-relatives. Only spouses are exempt. Tax amounts are typically based on the kinship relationship between the beneficiary and the deceased.

Families don’t have to be extremely wealthy to use trusts to protect assets from state estate taxes. They are also helpful when the family wishes to maintain their privacy, since assets held in trust do not go through probate and will not become part of the public record.

For families with privately owned businesses of any size, an experienced estate planning attorney can help create a Family Limited Partnership to work with the rest of the family’s estate plan. This will ensure the family business passes to the next generation without conflicting with the estate plan.

Reference: The Alliance Times-Herald (March 22, 2022) “Estate, Inheritance Taxes”

Estate Planning Mistakes to Avoid

“It is a common misconception that only the ‘uber rich’ need an estate plan, when in actuality, everyone should have a plan.”

If you fail to create an estate plan, your state’s laws will determine who will inherit your assets and if you have minor children, the court will appoint a guardian to raise your children. The state's laws may not be what you had in mind for your legacy. However, this happens if you fail to have an estate plan, as described in the article “AVOID THESE (estate planning) MISTAKES!” from Westchester & Fairfield County Business Journals.

Failing to have a plan or review your estate plan regularly. Failing to have a plan is the most common mistake Americans make. Unfortunately, less than half of all U.S. adults have estate planning documents in place, and only 36 percent of parents with minor children have end-of-life plans. You may feel estate planning is optional. However, everyone over 18 should have a plan.

It doesn’t have to be complicated. However, a simple will prepared by an experienced estate planning attorney indicating who should receive your assets upon death and advance directives indicating who will handle medical (health care proxy) decisions and financial power of attorney decisions in case of incapacity is a good start. Once your plan is in place, reviewing it every three to five years is a good idea.

Thinking that a trust will make things too complicated or neglecting to fund a trust. Revocable and/or irrevocable trusts are excellent ways to avoid probate, the surrogate court’s process to validate a will and executor and specify how funds will be distributed to beneficiaries. Using a revocable trust and properly funding can eliminate the need for some or all of your estate to pass through probate, depending on how the trust is structured.

Relying too heavily on beneficiary designations. Far too many people think they can avoid having an estate plan by depending on beneficiary designations on all assets. For example, let’s say you have an investment account in your name alone, with your spouse and children as beneficiaries. From a tax planning perspective, you may lose tax planning opportunities if funds are passed directly to a beneficiary spouse. If a beneficiary is a minor and receives the assets, the court must appoint a guardian. Those funds would then be held in control of the court until the minor beneficiary reaches the age of majority. A trust for a minor child is one way to solve this problem.

If a named beneficiary dies before you without a secondary or surviving beneficiary, the account will become part of the probate estate. If you have received Medicaid benefits, whether home care or nursing home care, the asset will be subject to any claims made by Medicaid or creditors.

Using online templates and forms. Estate planning attorneys devote a fair amount of time to fixing the mistakes made by people downloading online forms. They may be inexpensive initially. However, mistakes and/or omissions can’t be corrected if an individual becomes incapacitated or deceased. In addition, when the forms don’t comply with state-specific laws, they may become invalid.

Keeping estate plans and wishes a secret. If family members or trusted friends don’t know you have an estate plan or don’t know where documents are located, it makes their tasks very difficult. The person you name as your health care power of attorney, for instance, needs to know where all of your advance directives are located and be able to access them in the event you become incapacitated. Similarly, your executor needs to know where wills and trust documents can be found. Equally important is discussing your wishes for burial, funeral and other arrangements.

Having a plan for incapacity and death is a gift to those you love, ensuring they know what to do, sparing them from a frantic search for time-sensitive documents and alleviating them from guessing what you would have wanted.

Reference: Westchester & Fairfield County Business Journals (March 16, 2023) “AVOID THESE (estate planning) MISTAKES!”

Planning for Long-Term Care with Irrevocable Trusts

“With the possibility of needing long-term care in the future, many people are interested in proactive planning.”

One of the best strategies to plan for long-term care involves using an irrevocable trust. However, the word “irrevocable” makes people a little wary. It shouldn’t. The use of the Intentionally Defective Grantor Trust, a type of irrevocable trust, provides both protection and flexibility, explains the article “Despite the name, irrevocable trusts provide flexibility” from The News-Enterprise.

Trusts are created by an estate planning attorney for each individual and their circumstances. Therefore, the provisions in one kind of trust may not be appropriate for another person, even when the situation appears to be the same on the surface. The flexibility provisions explored here are commonly used in Intentionally Defective Grantor Trusts, referred to as IDGTs.

Can the grantor change beneficiaries in an IDGT? The grantor, the person setting up the trust, can reserve a testamentary power of appointment, a special right allowing grantors to change after-death beneficiaries.

This power can also hold the trust assets in the grantors’ taxable estate, allowing for the stepped-up tax basis on appreciated property.

Depending on how the trust is created, the grantor may only have the right to change beneficiaries for a portion or all of the property. If the grantor wants to change beneficiaries, they must make that change in their will.

Can money or property from the trust be removed if needed later? IDGT trusts should always include both lifetime beneficiaries and after-death beneficiaries. After death, beneficiaries receive a share of assets upon the grantor’s death when the estate is distributed. Lifetime beneficiaries have the right to receive property during the grantor’s lifetime.

While grantors may retain the right to receive income from the trust, lifetime beneficiaries can receive the principal. This is particularly important if the trust includes a liquid account that needs to be gifted to the beneficiary to assist a parent.

The most important aspect? The lifetime beneficiary may receive the property and not the grantor. The beneficiary can then use the gifted property to help a parent.

An often-asked question of estate planning attorneys concerns what would happen if tax laws changed in the future. It’s a reasonable question.

If an irrevocable trust needs a technical change, the trust must go before a court to determine if the change can be made. However, most estate planning attorneys include a trust protector clause within the trust to maintain privacy and expediency.

A trust protector is a third party who is neither related nor subordinate to the grantor, serves as a fiduciary, and can sign off on necessary changes. Trust protectors serve as “fixers” and are used to ensure that the trust can operate as the grantors intended. They are not frequently used, but they offer flexibility for legislative changes.

Irrevocable trusts are an excellent way to protect assets when drafted with both protection and flexibility in mind.

Reference: The News-Enterprise (March 18, 2023) “Despite the name, irrevocable trusts provide flexibility”

Single Parents Need Estate Planning

Nobody likes thinking about what happens if they should become incapacitated or die. However, we all need to have a plan in place for just these possibilities.”

For single parents, estate planning is an even greater need than for married couples, advises a recent article, “Estate planning 101 for single parents,” from The Orange County Register. However, even single parents blessed with a strong support system need an estate plan to protect their children. Here’s why.

An estate plan names a guardian in the will. Who will raise your children and become their guardian if you unexpectedly die or become incapacitated? If the other parent is surviving and has not lost parental rights, they will have custody of the child or children as a matter of law. This is not guardianship.  They are the legal parent.

However, if the other parent is deceased or their parental rights have been terminated, the court will need to grant guardianship. You need two documents to name a person whom you would want to raise your child. One is your will. It’s a good idea to list more than one person, in case someone named cannot or doesn’t wish to serve.

For example, “My mother, Sue Sandler, and if she cannot serve, then my brother Mike Sandler, and then my friend Leslie Strong.” There’s no guarantee that the court will appoint any of these people.  However, the court may consider the parent’s preferences.

Depending upon your state, you could have a “Nomination of Guardian” document separate from your will. Remember that your will becomes effective only upon your death. If you become incapacitated, this document would be considered when determining who will be named guardian.

You’ll also want a health care directive. This document states who is authorized to make health care decisions for you, if you cannot, and provides general directions about what kind of care you want to receive.

If there are minor children, a “Nomination of Health Care Agent” should also be in place, where you nominate another person to make healthcare decisions for your children if you cannot. For example, if you and your children are in a car accident and you are incapacitated and can’t respond to authorize health care, hospitalization, or other care for your child.

A will and a trust are critical if you have minor children. The will sets forth your nomination of guardians, and a trust can hold your assets, including life insurance proceeds and any other significant assets for the benefit of your children as directed in the trust. The trust is managed by the successor trustee appointed in the trust document. Even if the other parent lives and the child lives with them, the trust is controlled by the trustee, so your ex cannot access the money and the children receive the funds according to your wishes.

If you have only a will and die, your estate will go through probate and assets will effectively be put into a trust for the child and be given to the child when they become of legal age. However, most 18 or 21-year-olds are not mature enough to manage large sums of money, so a trust managed by a responsible adult with a framework for distribution will ensure that the assets are protected.

Once a child reaches the age of legal majority, they are considered an adult. As a result, the nomination of a guardian is no longer necessary, nor is the nomination of a health care agent. However, this is when they need to execute their health care directive, power of attorney and HIPAA form. If they were to become seriously sick, even as their parent, you would not have any legal right to discuss their care or treatment with health care providers without these documents.

Reference: The Orange County Register (March 12, 2023) “Estate planning 101 for single parents”