While a spouse may be the primary beneficiary in most estate plans, care must be taken relative to other beneficiaries – especially minor children, children with disabilities, and elderly parents. Its very common for a couple to believe the estate plan is really to address what happens when the primary bread winner is suddenly gone. Yes, its about that for sure, but also when both spouses are suddenly gone – the consequences of which are immeasurably worse.
Your estate plan can provide special provisions for elderly parents, minor children, education funding, charitable giving, and children of a prior marriage. Where necessary, you can specifically disinherit a family member who would otherwise participate in your estate.
Your plan should also protect your spouse and your children from creditors, predators, themselves, unexpected lawsuits and future divorcing spouses. Most people don’t know this is possible or to ask questions about it. In the estate planning world, we do this through the use of what is sometimes referred to as a “Bypass” Trust for the Surviving Spouse and through special Children’s Trusts. With the right type of trustee in place (a disinterested or third-party trustee), you can enjoy asset protection for your spouse and children by allowing the trustee to control (or stop) distributions from the trust until the creditor issue has gone away.
Another important feature is to name a guardian for your minor children. While this may be superfluous with a well drafted estate plan, occasionally some institutions (i.e., school districts) will insist on a court appointed guardian. Having the guardian named in your estate plan will make this process relatively painless.