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Three little things to know about a will if you have children

Posted June 18, 2014 in Advice Column, Grimes

For this month’s article, it has been requested of me to discuss wills.

There are other situations that give rise for the need for a will, however, this article will focus on why a person with a minor child, whether married or not, needs a will.

If you die and do not have a will, if you have no spouse (or your spouse dies in the same accident), but do have children, the estate is split equally between the children and immediately distributed to the children who are older than 18. But, what happens to the money belonging to the children who are not yet 18 years old?

This is where the trouble lies.  For many people with young children, the most common asset is life insurance. And, of course, if your early death happens to be at the hands of a drunk driver or some other unfortunate event, that opens the door for a lawsuit, that money becomes part of your estate to be split by your children, as well.

•  The money is put in a conservatorship. A conservator is appointed to invest the money until your child turns 18 years old.  His or her 18th birthday party is a whopper because that’s when he or she becomes rich. Most parents are not very comfortable thinking that their children will come into very large sums of money on their 18th birthday. So, how can you keep some control over that money, even though you are dead?

• While a common solution is to leave the money to a third party, like a sister or grandmother who promises to care for the child, I strongly recommend against this. While the relative or friend may have every intention of care for your child, there are legal events that can actually prohibit them from keeping that promise. Presume you left your life insurance to your mother, who now needs to enter a nursing home. The Medicaid worker does not care that the money actually belongs to the kids. Under the law, it belongs to her and is used to pay for medical care.

• The correct answer lies in your will. The will should contain a “contingent beneficiary trust.”  Everything in your estate should be left to the trust. This includes your life insurance, especially. In order to accomplish this, you will need to change the beneficiary designation on your life insurance policies. When you die, a trustee is appointed to invest the money, use the money to care for your children and then distribute the money to your children, over several years of your children’s lives, as you have directed. An attorney can help you decide how you want the money distributed and direct you in getting all of your paperwork in proper order.

Information provided by Cynthia Letsch, Letsch Law Firm, 6165 N.E. Eighth, Johnston, 515-727-1715, www.LetschLawFirm.com.





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