Attorney At Law: Every parent needs to have an estate plan

By Britt Burner, Esq.

If you are a parent of a young child, you have probably heard that you should have a will. But do you know why? There are two main reasons a parent of a minor child needs a Last Will and Testament and, in some cases, a revocable living trust. The first is to create a testamentary trust to hold assets distributable to the child who cannot legally inherit assets as a minor. The second is to name a guardian in the event both parents pass away before the child reaches the age of eighteen. 

So, what happens if you die without a will or trust? This is referred to as dying “intestate.” If you die intestate, to the extent that you have assets in your sole name, they will be distributed according to the state’s intestate succession statute. 

In New York, the spouse inherits the first $50,000 of your assets and the balance is distributed 50% to the spouse and 50% to the child(ren). This is usually not practical for a married couple, since most people want the surviving spouse to inherit everything, with children inheriting only upon the death of both parents. 

If you are not married and 100% of the assets go to your child(ren) or if you are married and it is only 50%, the default scenario is incredibly inefficient. If assets are to be paid out to a minor rather than to a testamentary trust created by your will or trust, a guardian of the property will be appointed by the court to handle the finances. Even if a family member or friend is eventually appointed, the court still appoints a guardian-ad-litem to represent the interests of the child. This is expensive, intrusive and ongoing. An annual budget is required and any deviations must be approved by the court. 

Furthermore, the assets remain in an account that is held jointly with the court and can only be accessed by court order. Additionally, the child will be able to take possession of all remaining assets at either 18 or 21 years of age – a time when the child may be too emotionally immature or inexperienced with finances to handle this sum of money. 

It makes sense to engage in estate planning that creates a trust for the benefit of your child(ren) upon your death. Any life insurance, bank accounts or retirement assets can list the trust as beneficiary. Organizing the disposition of your assets is crucial to making sure that those that are dependent upon you will be cared for at the time of your death.

Beyond the finances, there is the consideration of physical custody or guardianship of the minor child. If both parents pass away without a will that nominates a guardian, someone must petition the court to be appointed. This someone could be anyone, not necessarily the individual(s) you would choose to raise your child in your absence. This could lead to different family members or friends asserting control, with a judge ultimately deciding who will take on this responsibility. 

The simple solution to make this awful situation smoother for those you leave behind is to prepare a will. That way you can choose who will raise your child, who will handle your child’s inheritance and under what circumstances your child will inherit.

Britt Burner, Esq. is a Partner at Burner Prudenti Law, P.C. focusing her practice areas on Estate Planning and Elder Law. Burner Prudenti Law, P.C. serves clients from New York City to the east end of Long Island with offices located in East Setauket, Westhampton Beach, Manhattan and East Hampton.