Estate Planning Mistakes - Number Ten

Many Wills unfortunatly fail to provide appropriately for minor beneficiaries. How do you want the property left to minors handled? The guardian named over the person of the child does not necessarily provide such guardian with rights to administer the assets left the child.

1. Do you want a minor child to get all assets left to him/her at 18 years of age? If yes, then name a guardian of the property.

2. Do you want a minor child to get all assets left to him/her at 21 years of age? If yes, then name a custodian of the property. Not only is the age higher but there is more flexibility provided a custodian.

3. Do you eant a minor child to get all assets left to him/her over a period of time beyond 21? If yes, then a Trust would be best. The terms and conditions of the Trust could be whatever you desire in the best interest of your child. The ages could go well into adulthood.

Contact us at http://www.ythlaw.com/ for expert legal advice.

How can I provide for my grandchildren?

Here is another question raised by a reader.

"How can I best provide for my grandchildren? My son has been divorced twice. His 2 children (5 and 9) do not have the same mother. I have a wonderful relationship with my grandchildren but not with their mothers. My son has full custody of his 9 year old son and joint custody of his 5 year old daughter. However, he is not financially responsible. What is the best way for me to provide for my grandchildren during my lifetime as well as when I die? Giving or leaving money to either parent for the care of the children is not an option."

In Response to your question:
During your lifetime, you may want to consider a gifting program. This would allow you to annually gift up to $13,000 (as of 2009, amount changes periodically) in a separate trust for each child. The terms of the trust will dictate how the money will be spent. You should not serve as the trustee but designate a person or institution that you trust. Other options for gifting would include custodian accounts (distribution required at 18 or 21) and 529 Plans (limited to college education expense). You should also be aware of any tax implications. Prior to any final decision, consult with your tax advisor.

If you set up an irrevocable trust during your lifetime, it could continue under the same terms and conditions when you die. If you did not set up anything during your lifetime, you could establish a testamentary trust with terms and conditions that you desire for the care of your grandchildren. However, whenever assets skip a generation (ie. to grandchildren instead of children), a generation-skipping transfer has occurred and a tax is imposed unless the amount is within the exemption. There is no tax if you do not exceed your 1.5 million dollar lifetime exemption.

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