As your child grows up, his or her eighteenth birthday could affect your estate plan in surprising ways. If you didn’t realize that this milestone would affect your estate planning, you may want to review the possible changes that you can make.
Your Child Becomes a Legal Adult
Because your child becomes a legal adult on his or her eighteenth birthday, certain protections in many estate plans no longer apply. These include:
- Guardianship designations
- Custodians and trustees to safeguard minors’ inheritances
- Rules restricting minors’ ability to be beneficiaries of retirement plans and life insurance
Many parents include guardianship designations in their estate plans in case their children need someone to care for them in the absence of the parents. While guardianship designations are not binding on the judge who ultimately selects the guardian, they provide helpful guidance. Once your child turns eighteen, he or she may no longer need a guardianship designation. If your child has special needs, however, then you may want to keep the guardianship designation in place.
In addition, your estate plan may include provisions that appoint custodians or trustees to manage money for any minors who would inherit. These provisions will become unnecessary when your child turns eighteen. The same goes for restrictions on minors’ ability to receive payouts from life insurance or retirement plans.
Changing Your Estate Plan
Once you review your estate plan, you may realize that portions of it need changes because of your child’s birthday. For example, you may want to rewrite your will to give inheritances directly to children rather than their parents or custodians. Or you might need to change your beneficiary designations on a retirement plan or life insurance.
Further, some children need additional protections because they have special needs. You might want to set up a special needs trust (SNT) for your adult child who has significant medical costs or trouble with personal care. Estate planning offers the opportunity to plan for both your and your child’s future.
Want to start planning your estate? Local attorney Andrew Szocka, Esq. provides thorough and speedy estate planning help in the Chicagoland area. To schedule a free initial consultation, visit the Law Office of Andrew Szocka, P.C. online or call the office at (815) 455-8430.