Sacramento's young professionals may not think they are old enough or rich enough for estate planning, but that mistake could lead to years of heartache and strain for their relatives should an accident happen. For those young people who have taken the initiative to speak with an estate planning lawyer, however, it is most likely they have only created a will. Instead of just making a will, there are other options, including trusts, that may make more sense.
Young parents especially may consider trusts an important addition to their estate planning needs. If something tragic did happen and left their children without a living parent, a trust protects the children's inheritance. Establishing a trust, especially one with clear directions on how money should be spent or used, would prevent children from accessing their money too early or making poor decisions before they ever become adults.
A trust can also be used to ensure that a child or beneficiary will actually get an inheritance instead of the money being used to cover a parent's outstanding debts.
While trusts are certainly important for young parents and professionals, but it should not be the only estate planning tool they should rely on. Rather, wills can be used in conjunction with trusts to provide the best fit for a person's needs.
For a parent, wills can name who will be a child's guardian if both parents are gone. Wills also direct a court or executor who gets whatever remaining money is not tied up in a will. Any money outside of a trust, however, will first be used to pay for attorney's fees, administrative costs, taxes and outstanding debts before being distributed according to a will.
Although wills and trusts seem like the thing of the rich and famous, estate planning is an important step that anyone and everyone must do to make their final wishes happen.
Source: The Green Bay Press-Gazette, "Everyone needs estate planning," Dec. 27, 2011