UPCOMING EVENTS

SEMINARS FOR SEPTEMBER 2017

MONROEVILLE
Tuesday, September 12, 2017
2:00PM
The Estate Planning Centers
3824 Northern Pike, Suite 801B
One Monroeville Center
Monroeville, PA 15146
Just west of Red Lobster on Rt. 22

MURRYSVLLE / DELMONT
Tuesday, September 12, 2017
7:00 PM
Holiday Inn Express
Delmont/Murrysville
6552 Route 22
Delmont, PA 15626
Behind Lamplighter Restaurant on Rt. 22

MURRYSVLLE / DELMONT
Thursday, September 14, 2017
2:00 PM CANCELLED DUE TO CONFLICT

Holiday Inn Express
Delmont/Murrysville
6552 Route 22
Delmont, PA 15626
Behind Lamplighter Restaurant on Rt. 22

MONROEVILLE
Thursday, September 14, 2017
7:00 PM 
 CANCELLED DUE TO CONFLICT

The Estate Planning Centers
3824 Northern Pike, Suite 801B
One Monroeville Center
Monroeville, PA 15146
Just west of Red Lobster on Rt. 22

MONROEVILLE
Saturday, September 16, 2017
9:30 AM
The Estate Planning Centers
3824 Northern Pike, Suite 801B
One Monroeville Center
Monroeville, PA 15146
Just west of Red Lobster on Rt. 22

 
 

 
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Proudly serving clients throughout Allegheny, Westmoreland, Butler, Fayette, and Washington Counties; including Pittsburgh, Monroeville, Greensburg, Latrobe, Cranberry, Wexford, Sewickley and YOUR community.

Don’t Leave Assets to Minors Without Planning

The most common, natural way to pass assets following a death is to our children or grandchildren.  Whether with a Will, Trust, life insurance, retirement plan beneficiary, or simply by failing to plan and being relegated to the statutory default of intestate succession, most assets pass down the family tree eventually.  It is critical, however, that extra care be taken when there are children under the age of 18 who might benefit from such intended kindness.  Without proper planning, your intended benefit can turn into a burden for your family.
 
We all know that a minor cannot legally enter into a contract. Similarly, they cannot own and control financial assets in their own name.  When a minor has a financial asset, someone has to be in charge until the child matures.  A “Uniform Transfer To Minors” account (UTMA) is a common example, where a minor’s money is placed in an account for their benefit, but under the control of a designated ‘custodian’ until they reach a trigger age (usually between 18 and 25).  Similarly, trusts operate by designating a Trustee to make decisions about how to manage money for a minor until they mature.  But what happens if these arrangements are not set up in advance?
 
Consider a common example where Dad’s Last Will and Testament leaves 80% of his estate to his children, and 20% to his grandchildren.  Similarly, his life insurance policy has the same beneficiary designations.  If Dad dies when some of the grandchildren are still under 18, what happens?
 
The Will requires the probate system to give effect to his bequests to the family.  I won’t belabor the details of probate here, but suffice it to say that after spending a while navigating the probate system, ultimately the Executor of the estate will be ready to make distributions.  What happens to the money to the minor grandchildren? In estates involving minor beneficiaries, the probate court requires a full accounting of the estate disposition and distribution to be submitted for court approval. It will require that the money for the children be placed into protected accounts for the children which they cannot access until they are 18.  The court will decide who is in charge of the money until that time. Most often, the court is not going to appoint the parents of the children to manage these assets.  This reluctance stems from a concern that the parents will squander the money while the children are young, leaving them with little or nothing when they are older. Instead, the court will require the Executor to obtain an appointed Guardian for these assets. The court will appoint an attorney or accountant or some other third party to control and manage the assets for the child until they reach age 18. Until that time, distributions for the child may require a court order. Then, at 18, the child magically matures overnight, takes control, and is free to do whatever they want with the money, for better or worse.  Instead of a wonderful gift, the family was saddled with probate, guardianship, and a young person with free reign over inherited assets at the tender age of 18.
 
The same situation arises with the life insurance. While life insurance doesn’t technically pass through probate, the insurance company cannot issue a check to the minor beneficiary. Instead, it will require that a Guardian be appointed by the court to administer the life insurance proceeds until the child is 18.  Thus, we have the same situation we had with the inheritance for the minor grandchild.
 
The good news is that other alternatives are readily available.  Trusts are one option which have grown increasingly popular with local families. Modern trusts permit families to designate who will handle assets for young beneficiaries, how they should be managed, and when the beneficiary can take over control independently. Another approach is the use of those UTMA designations in your planning, taking steps in advance to designate who will be in charge of the minor’s assets, and specifying the age when the child can access the account by themselves (up to age 25).  There are a variety of ways to handle these situations, and virtually all of them are better than just leaving assets to the name of the minor. You don’t have to be ultra-wealthy to benefit from planning. No matter the size of your assets, what you leave behind is important to your family.
 
Don’t let your family get trapped in this mess.  If you haven’t taken the time to have a discussion with an attorney who focuses their practice on helping families to design, construct and implement a contemporary estate plan for today, tomorrow, and the years ahead, don’t wait any longer. As always, our initial consultations are free and provide an easy way to determine what strategies might work best for your family.  No one plans to fail, but far too many fail to plan.