Recently I was approached by several of my friends who asked, “Do I really need a Will?” They, like many other young parents, believed they didn’t need one because they did not have enough assets to warrant having a Will prepared. However, if there’s ever a time you need a Will, it’s when you have young children.
(Photo by LucasTheExperience)
A Will does not just dictate who gets your money at your death. A Will also states who will become the legal guardian of your children if both you and your spouse die and further, who will manage the funds you leave to your children. While no one wants to think about this issue, if you don’t have a Will in place at your death, a Court will determine who gets legal custody of your children. That person may or may not be whom you intend, and this absence of direction could lead to a custody battle.
Another issue young parents often overlook is life insurance. Most parents have some kind of life insurance, whether it’s through work or an independent policy. At death, these policies will pass to the policy’s named beneficiary. Parents often name their spouse, and then their children. However, if both parents die, what happens to the money for their children?
A life insurance company will not pay the money directly to a minor. Therefore, a court appointed conservator will need to be in place, and conservatorship proceedings are expensive. In addition, once your child becomes an “adult,” the funds will pass directly to the child and there will be no restrictions on how this money is spent. Usually parents want these funds to provide for their children and their education, and that can be accomplished by creating a testamentary trust within your Will. At your death, the trust will hold these assets until your children reach a designated age (I designated a third at 25, half at 30, and the remainder at 35), and a trustee named by you can ensure the funds are used only for your children’s health, education, maintenance, and support. This will guarantee your kids don’t spend it all on fancy cars instead of a college education! However, without a Will or Trust in place, this cannot be accomplished.
So, my answer to my girlfriends was, “Yes, all young parents definitely need a Will!” It is just one of the many ways parents can protect their children.
Lindsay Andrew is a Denver/Lakewood Estate Planning attorney with the firm of Gerome & Hickey, P.C. She is also a mother of a three-year-old boy and a three-month-old daughter. With over eight years of legal experience, she is able to balance her career and family life by practicing law on a part-time basis. She can be reached at (303) 936-3779 or via email at [email protected].