My husband and I welcomed a new bundle of joy to our family. PJ was born February 17th, and we are over the moon in love with this little baby boy. Welcoming a new baby into the family is a momentous occasion, and a life changing event.
If you’re anything like me, when your child was born your heart grew and so did your anxiety. There is this new life to care for, and you’ll probably do anything to make sure she is protected and provided for. As a new mom I understand now more than ever the need for a solid estate plan. Not only for the disposition of estate property, but to ensure the family is taken care of in our absence.
For most people a comprehensive estate plan should include the following documents:
· Statutory Durable Power of Attorney;
· Directive to Physicians, known as a ”Living Will;”
· Medical Power of Attorney;
· HIPAA Authorization for the release of medical information;
· Declaration of Guardian;
· HIPAA Authorization for Children;
· Medical Power of Attorney for Children; and
· Declaration of Guardian for Children
I’ll be presenting a series of three blogs reviewing the most important elements of a good comprehensive estate plan every new parent should know.
1. The Will and the Testamentary of a Trust;
2. The Declaration of Guardian for You and Your Children; and
3. Medical Powers of Attorney and HIPAA Authorization for You and Your Children.
Let’s get started with the first, and potentially most crucial.
THE WILL AND THE TESTAMENTARY TRUST
The Will is the backbone of a good estate plan, and depending on the size of the estate, an intervivos revocable trust might be necessary as well. I’ll write a separate blog to detail the intervivos revocable trust. Before we had children, we thought we didn’t need much estate planning; after all, the Texas Estates Code would give the community property to the other spouse when one of us passes, and an independent administration, if necessary, wouldn’t be too cost prohibitive since we didn’t have any minor children. But now that we have a baby, a minor child, the disposition of our estate property is more complicated, and thus more costly, and I want to make sure that our child is provided for in our absence.
One of the most important parts of a Will when dealing with minor children is the creation of a testamentary trust. That is, a trust created upon death for the benefit of whoever you designate, like your minor children. A testamentary trust in the body of your Will goes into effect upon your death and under other qualifiers, like age. For example, any beneficiary under the age of 18 or a beneficiary who is incapacitated. By including a testamentary trust I can be sure that the assets in my estate will be used for the benefit of and to take care of our son in our absence.
When preparing your will you need to consider the important role of the fiduciaries, like the executor and trustee, and appoint someone you trust to collect and distribute your property properly. This could be the guardian you’ve designated in other documents, which will be discussed in a later blog, or a third-party individual or corporation. You must also consider whether or not to compensate your executors and trustees for their roles. It is customary to compensate a third-party individual or corporation, and the Texas Estates Code allows compensation in the amount of 5% of what is collected and what is distributed. This is money that will reduce the total amount left to take care of your child in your absence, so it’s an important decision.
You should also consider allowing the executor to act independent of the court, and without bond. Texas requires the will set out very specific language to allow an executor to act without court intervention and without posting a bond. Many internet wills and holographic wills leave out this necessary language and thus creates a much more costly probate proceeding to execute the wishes of your lost loved one. Again, that is money that could go towards taking care of your child in your absence.
I highly recommend consulting an attorney to make sure your wishes are set forth in a solid will. Many times in my probate practice I am approached by someone who has lost a loved one who prepared their own will or used an internet will, and each time that will doesn’t do what the person intended the will to do. The estate left to a minor child is controlled by the laws of the State of Texas, and not you or the family can change that once you are gone. The cost to probate self-prepared, holographic, and internet wills is always more than if they had consulted and paid an attorney to prepare their will.
Needing some help preparing your Will? I’m here to help.