Planning and Children
I know how you feel. Having three young children under the age of five years old, time for yourself and time to address your planning is at a premium. In what seems like a former life, I used to run several road races a year and play tennis three to four times per week. Now that time to exercise, sleep and plan is at a premium if it ever happens at all. Like most parents, however, most of that time for planning is spent worrying about saving for my child(ren)’s education or calculating how my spouse and I are going to retire. When young parents think about it, if they think about it at all, estate planning is far down the To Do list. The common sentiment is that the administration of my estate is such an abstract concept right now and so far off into the future that I do not need to worry about it. This sentiment can certainly be true in the majority of circumstances, but in the event that the abstract becomes a reality, it can have catastrophic consequences for your family if something should happen to you.
Depending upon which disturbing poll or study that you read, the numbers are startling. Close to 60% of U.S. adults do not have a Will or Living Trust in place today. Most polls show approximately 80% of U.S. adults age 18 to 34 do not have a Will or estate plan in place. If you have assets in your name and especially if you have small children this needs to change. Millennials are approaching 40 years old and there are many reasons why people in this age bracket should have a Will and/or estate plan.
Biggest Reason: Guardianship and Trust Language
For parents with children under 18 years of age, it is vital to include a guardianship clause in your Will to legally designate someone to care for the person and property of your children when you pass. If this is not done, guardianship can result in chaos and legal expenses. Eventually a guardianship proceeding will take place that will cost thousands of dollars in legal fees with the costs rising in the case of more contentious proceedings. If you have such a family dynamic, grandparents could end up fighting in the courtroom over who will be the Guardian of the grandchildren.
For any funds inherited by a child under age 21, a Uniform Transfers to Minors Act account is set up for the guardian to hold in trust for that child until they reach 21 years of age. The Court is petitioned to set up such an account, and there must be an accounting every year until the child turns 21. If there is a sizeable amount of assets, the child will receive those assets upon their 21st birthday. Having the conversation about guardianship and putting into place trust provisions that will prohibit your children from accessing funds until an age that is later than 21 is crucial. My clients often select the age of Thirty or Thirty-Five when discussing an age that they feel comfortable with their small children gaining an inheritance outright. If you care about protecting and providing for your family then you have life insurance and this can lead to a sizeable estate for a young person if insured correctly. Although it is prudent to obtain life insurance to protect your family, failing to plan for what might happen with the insurance proceeds is careless.
Another Reason: You Have Enough Stuff
After discussing life insurance above, the common misperception of Millennials is that they do not have enough assets to worry about their planning. As mentioned above, if you have life insurance this idea quickly evaporates. Even without life insurance, approximately 40% of Millennials own a home and even more own a vehicle. Furthermore, much more of our lives are spent online and more people possess digital assets such as credit card rewards and airline miles. Failing to plan and nominate someone to take care of your affairs, either in a Will or Trust, can lead to chaos. Multiple family members could vie to be the person to administer your affairs and a significant other who has cohabitated with you for years will potentially be on the outside of any decision making.
Last Reason: Intestacy and the SECURE ACT
Whether you are married or not and have children, New York State law will dictate who inherits your property if you do not have a Will. If you are married with children, the laws of intestacy in New York will dictate that the first $50,000 and ½ of your estate in excess of $50,000 will pass to your spouse and the other ½ of your estate will be inherited by your children. If you are not married, your significant other will receive nothing. In this scenario, your property will be inherited by your children if you have children, and if not, your property will be divided between your relatives in such a manner that your significant other receives nothing.
Beneficiary designations have also become more critical with the passage of the SECURE Act. In terms of traditional retirement assets, your spouse is still an exempt beneficiary. This means that if you name your spouse as a beneficiary then when the traditional retirement asset is inherited by your spouse the distributions can be stretched over your spouse’s lifetime. For your children and significant others, retirement assets must now be distributed over a 10 year period. If a minor child inherits a retirement asset, then the 10 year period will begin to run at age 18, which means the retirement asset will need to be fully distributed by age 28.
Not as Hard as You Think
Getting estate planning documents into place is also not as difficult and time consuming as people think. Contacting me can result in your estate plan being put into place in three steps. First, click the link to access our estate planning questionnaire and complete it. Second, contact me with your questionnaire and propose a day and time for a half hour phone call to discuss your estate plan. Third, draft documents will be sent to you for your review and upon your approval of the documents we can arrange the execution of the documents. During the current public health crisis, your documents can even be executed with me via videoconference instead of meeting in person.
This publication is intended as an information source for clients, prospective clients, and colleagues and constitutes attorney advertising. The content should not be considered legal advice and readers should not act upon information in this publication without individualized professional counsel.
McConville Considine Cooman & Morin, P.C. is a full-service law firm based in Rochester, New York, providing high-quality legal services to businesses and individuals since 1979. With over a dozen attorneys and a full paralegal support staff, the firm is well-positioned to right-size services tailored to each client. We are large enough to provide expertise in a broad range of practice areas, yet small enough to devote prompt, personal attention to our clients.
We represent a diverse range of clients located throughout New York State and New England. They include individuals, numerous manufacturing and service industry businesses, local governments, and health care professionals, provider groups, facilities and associations. We also serve as local counsel to out-of-state clients and their attorneys who have litigation pending in Western New York courts. For more information, please contact us at 585.546.2500.