Parents usually consider their children when making decisions, whether big or small. And while no parent wants to leave their child behind, preparing for the unexpected, like death, is something that parents venture into to protect their children. With estate planning tools such as wills and trusts, parents can ensure that their children will have enough resources for their sustenance, growth and development, even if their parents are no longer with them.
Why create both a will and a trust?
While parents can name their minor children as beneficiaries of their will, their children cannot legally own the assets left to them until they turn 18. In California, if a child’s inheritance amounts to more than $5,000, it must go through court proceedings, which can be lengthy and costly. This is where the importance of a trust comes in. If you set up a trust for your child’s inheritance, the trust will hold the assets with a trustee managing the same until the child becomes an adult.
Guardianship: a possible alternative to a trust
When creating a will, not only can you allocate property to your dependents, but you can also appoint a guardian to care for them under specific directions. If you appoint a guardian in your will, the guardianship will hold the assets you left for your child. While courts can also set up guardianship if you fail to do so, appointing a guardian of your choice can give you confidence that they will properly manage the estate.
Creating a will and trust as part of your estate plan can protect your heirs and beneficiaries, especially if they are minors. Having clear directions as to the division of estate assets and assigning beneficiaries can save your loved ones time and money.
