The following series of posts contain articles posted at Kaboose.com, featuring an interview with my colleague, Kimberly Hegwood. If you have any questions or want to speak with me about these issues, please call me at 770-425-6060.
We asked Hegwood a few questions that probably affect plenty of parents. Here are her answers:
1. How do I set up a will? Can I do it online or through an attorney? What are the pros and cons of both?
Kimberly: The best way to set up a will is by seeing an estate planning attorney. I can’t tell you that you need an attorney to draft a will for you. However, if you mess it up, then your family could spend tens of thousands of dollars trying to accomplish your wishes.
Your children are your most valuable assets. Do you really want to take a chance on forms that have not been looked at by an attorney? The counseling that goes into estate planning is very important. You may have a taxable estate, need asset protection, a special needs trust for a child, or many other issues that are not always in fill-in-the-blank forms. Do you know what the terminology is and if your forms are correct? An online or fill-in-the-blank form may be cheap, but you get what you pay for.
2. I have insurance money and I have set my child up as the beneficiary should something happen to my husband and me. How do we make sure it goes to our children in a productive way?
Kimberly: I'd say the worse thing you can do is designate a minor child as a beneficiary on insurance proceeds. A minor child cannot receive the proceeds. The insurance company will pay the proceeds to the registry of the court and your child will be able to get them at the age of 18. At this age, the money will be spent on things that your child wants but is almost never what they need. A kid I know inherited at 18 and used the first $5,000 to put new tires and a lift system on his truck. Smart kid but, at 18, still a kid.
The better plan is to designate your living trust, if you have one, or your estate if you don’t have a living trust, and make sure that your will has a testamentary trust in it. The trust, whether living or testamentary, can receive the proceeds and be used to take care of your child’s health, education, maintenance or support.
3. What if I trust my designated guardians to take care of my kids, but am nervous about them also being in charge of their money? How can I make sure they don’t use it for themselves or their children?
Kimberly: I always recommend that the child’s guardians are not the trustee of their money. Otherwise, it’s too easy for the guardian, who’s also the trustee, to have a conflict of interest. Your guardian, in most all cases, will receive social security for your child or children and that money will be used for them to take care of your children. The money you leave should take care of any extras that you designate, such as private schools, college, extracurricular activities and anything else you choose for that purpose.
4. How do I set up things such as selling my property and all of the assets in the house and then making sure that also goes to my child?
Kimberly: The provisions in your will or trust will provide that your property will be sold and the proceeds will be placed in a trust to take care of your children. A proper estate plan will take into consideration income and estate tax consequences so as to maximize your estate for your children.
5. If something happened to me, I’d prefer that my daughter stay with my mom, but she’s getting older and I worry that she wouldn’t be able to raise my child until she’s 18. Is there any way I can select a backup couple? Can I establish criteria that my mom must be able to manage? Is there a way I can set up co-guardianship or part-time guardianship to give my mother the help she would need to act as primary guardian?
Kimberly: Each court has its own policies regarding guardianships. Most will allow co-guardians to take care of children. You can delegate two people as co-guardians, but you will have to give one of them the discretion to dictate when the child must live with someone other than your mom.
6. I know the guardians I have designated would love my child and take good care of her. However, they are not speaking to my aunt, whom my daughter loves. Is there any way I can insist that they allow my child to maintain a relationship with her and her children? I don’t trust them to make the effort on their own.
Kimberly: You will only have so much control over what your guardians do after you are gone. You can leave instructions regarding your wishes, but they are not controlling. I would speak to the guardians and make sure that your wishes for your child will be their main concern rather than their personal feelings. If they cannot do this for you, then they may not be the best choice as guardians.
7. When you say documented instructions, what do I need to do to make sure that they are legal and binding? Do I have to get them notarized? File them somewhere?
Kimberly: You need to make sure that your instructions are executed correctly, first and foremost. Some states require that the documents be notarized and some even require witnesses. It is important to make sure that you know the correct way for your state.
8. Where is the best place to keep a will or other documentation? Can I leave it on my computer? Safe deposit box? With friends? Who should get copies?
Kimberly: The best place to keep a will is somewhere safe. You can’t leave it on the computer as it must be signed in front of a notary and witnessed. You can leave it in a safe deposit box but your executor needs to be a signatory on the box (otherwise, the document will not be accessible if something happens to you). I would not recommend leaving it with friends and I would not give copies to anyone who doesn’t need to see the contents of your will.
9. I have tried to discuss my concerns with my family (especially my parents). They tell me I am being morbid and don’t want to talk about it. What are your suggestions for overcoming this? I really worry that this is still up in the air and you never know what could happen.
Kimberly: If your concerns are about your parents planning, then you need to have “the talk.” What would they want if the unthinkable happens? What should you do if the unthinkable happens? How would they want you to handle the unthinkable? It is not morbid to have the talk. It is the best conversation you can have with your parents. It is so important to know what they would want and it is very important for them to know what you would want if something happened to you. Good parents plan for their children.
10. How can I ensure that my children are raised in the faith we have chosen or that they are taught our values or about our heritage? Is that something I can put in a will?
Kimberly: The best way to have your children raised in the faith you have chosen is to have guardians who are in the same faith. You can’t put what faith the guardians will choose for your child in a will. While you can request that your guardians raise your children in your faith, please know that if your guardians are of a different faith, it will be a difficult task for them to follow.
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[In Atlanta, call me, Steve Worrall, at 770-425-6060 or visit my website]