Wisconsin Trusts & Estates Blog

Thoughts on trusts & estates work, document assembly, and practice management.

Estate Planning for Young Families

We do a lot of estate plans for young families. (By young families, I mean any family with kids under 18.) Young families don’t need anything complicated, but they do have a couple of key estate planning needs.

First up is naming guardians. Guardians are the people who have parental responsibility for the kids if something happens to their parents. For most parents, this is not necessarily obvious—our clients might have parents on both sides, brothers and sisters on both sides, godparents (maybe more than one set if there are multiple kids), close friends who they talked to about this, and so on. So it’s important to write it down, otherwise the court will choose and it might not be who the parents would have chosen.

Second is creating a trust fund for the kids. This is a very basic testamentary trust, which means the trust language is included in a will, and the trust fund is only formed at the death of the parent. The parents pick a trustee and a termination age for the trust. The trustee is in charge of investing the money and making decisions about distributions. So the guardian (or the kid, as the kid gets older) would come to the trustee and ask for money for child support, a car, college tuition, a wedding, a trip around the world, or whatever else it is they want. The trustee decides whether the request is a good idea or not. If so, they can make the distribution. If not, they keep the money in the trust. When the kid reaches the specified termination age (we recommend 25-30), the trust fund is terminated and the (now) adult is in control of the money. The trustee is usually (but not always) the same person as the guardian. Without this, kids will get funds when they turn 18. An 18 year old with half a million dollars in his pocket is rarely a good thing, except maybe for the local Porsche dealer.

Along with the trust fund goes instructions for beneficiary designations. The parents should name the trust fund—not the kid, or an individual that would be managing the money—as contingent beneficiary. We give instructions on how to do this as part of our plans. A common mistake people make is naming the kids as beneficiary. Even with the right language in a will, if kids are named as beneficiary the money will go directly to the kids, and become theirs at age 18. Again, not a good thing.

The rest of the plan is the same as for everyone else—choose a person to be estate administrator, a person to be power of attorney for finances and a person to be power of attorney for health care.

The good news is, young parents rarely die. So the idea is to have a basic, affordable plan that covers these key needs. The parents make the plan, put it in a lockbox in the basement, and forget about it for 25 years or so. Then, when their kids are adults, they’ll replace it with a new plan, probably with the kids receiving everything directly (rather than in a trust fund) and the kids (rather than parents or siblings) as agents in the various roles. With that plan, they’ll also want to talk about more complex trust planning designed to avoid probate. But young people don’t need any of that—they just need a good basic plan. So, it’s much easier to do than most people think, it’s just a matter of doing it.  

Are you a parent ready to get started on a plan? Contact us to set up a no-obligation consultation.

Julian Assange and Document Assembly

A little over a week ago, the New York Times and others reported that the DOJ had mistakenly revealed that Julian Assange, the founder of WikiLeaks, had been secretly charged with crimes in federal court. The charges had been filed under seal, most likely to make it easier to apprehend him.

How did this come out? A copy and paste error by a U.S. Attorney, who mistakenly included a reference to the charges in an unrelated court filing.

This is a big potential problem for estate planning attorneys, too. And it’s not hard to do. In any given set of estate planning documents, our clients’ names show up in the documents anywhere from 15-50 times. Using traditional copy-paste methods, each one of those places is an opportunity to leave a prior client’s name in the document, breaching confidentiality obligations and creating an error in the document.

Our office uses custom-built document assembly software to eliminate this possibility. How it works is a bit complicated, but essentially we’ve built templates pre-coded with placeholders for (among other things) our client’s name. We can then fill in the name once, and have it go in all of the documents in the right place. Our system is advanced enough that for most families, we can create a complete, perfect set of documents from our meeting notes, without any copy-paste.

It’s truly a game-changer for us. And while we’ll never be privy to top-secret espionage charges, it makes sure we never let out any information we shouldn’t.

Thanks for reading. If you’re ready to get started with an estate plan, find out more about how it works here.

Welcome to the Trusts & Estates Blog

Welcome to the Wisconsin Trusts & Estates blog! This is a place for random thoughts on estate planning topics, as well as notes on practice management and document assembly. There should be a little bit for everyone—some posts intended for the public, and others for trusts and estates professionals or attorneys interested in document assembly.

Thanks for reading, and if you find something useful, please don’t hesitate to let us know in the comments.

Michael LauterbachComment