As a new Illinois parent, your life likely has become a whirl of all things baby. But in your zeal to love, feed and protect him or her, have you thought about starting an estate plan to provide for him or her now and in the future? If not, you should.
Kiplinger reports that you and your spouse, at the very least, should both contact an attorney and draft your respective Last Wills and Testaments. Not only will these legal documents establish that you want your child to inherit when you die, they should also name the person who you want to finish raising and caring for your child in the event both of you die in an unexpected and untimely accident. Nevertheless, these wills provide little value without some additional estate planning vehicles.
Additional estate planning considerations
Your most effective estate planning vehicles probably should include the following:
- A living trust naming your child as beneficiary and specifying the age at which (s)he will receive his or her inheritance, plus the trustee who will manage the trust and disburse its income for the benefit of your child during his or her minority
- A special needs trust if your child suffers from a birth defect or injury that will require him or her to receive lifetime care
- A school tuition plan that will start accumulating money for your child's future education
- Life insurance policies to fund the trusts
One of the biggest advantages trusts provide is that you can change their provisions at any time in the future you need or want to. Other benefits include the following:
- Since the law forbids a minor to own assets in his or her own name until (s)he reaches the age of majority, the trust owns the assets in it until that time arrives.
- If you name yourself as the initial trustee, you can continue to control all the trust assets as though you still owned them personally.
- You can also name a successor trustee who will step in to manage the trust in the event you can no longer do so because you have become injured, ill or incapacitated or have died.
- You can name the trust as the beneficiary of your life insurance policies, ensuring that the proceeds from them will not need to go through probate and instead will go directly into the trust when you die.
This is general educational information and not intended to provide legal advice.