We understand that as a parent of young children, most of your day to day focus is on caring for your children.  This focus needs to extend to your estate planning as well.  Here are 4 important estate planning documents that parents of young children need to have.

• Will

You name guardians for your minor children in your will.  Be sure to get the guardian’s permission before naming them.  This best ensures that the guardian will serve when needed.  Name back up guardians as well, just in case your primary guardian is unable or unwilling to serve when needed.

• Revocable Living Trust

Minor children cannot inherit directly; they, however, can be named as beneficiaries of life-time trusts that provide for their needs and are managed by a trustee.   When your child becomes an adult she can act as a co-trustee.  These assets can even be asset protected, so they can’t be taken in a subsequent divorce, bankruptcy, business failure, or lawsuit.

• Stand-by Guardianship; Child Care Power of Attorney; Temporary Guardianship Authorization

Stand-by Guardianship; Child Care Power of Attorney; and Temporary Guardianship Authorization are all names for the same document.  Because the guardians in your will only have authority to act if you are deceased, you need to authorize these same guardians to care for and make decisions for your children if you are alive, but somehow incapacitated, and unable to care for them.  Again, name contingent temporary guardians.

• First Responder Authorization

The First Responder Authorization authorizes trusted friends and neighbors to stay with your children until your named guardians arrive to take them into their custody.  Include trusted friends and neighbors who can get to your house within 15 minutes.  This is about how long the police will stay in your home before taking your children into protective custody (i.e. foster care.)

If you are the parents of young children, you need comprehensive estate planning, incorporating these documents.  Be sure to consult with a qualified estate planning attorney.

The Hammond Law Group is a member of the American Academy of Estate Planning Attorneys.

In the US, a Uniform Act is an act proposed by the Uniform Law Commission to standardize state laws in the United States. Since Congress lacks the authority under the Constitution to legislate many issues, and the power is left to state governments, there is a need to have some consistency within laws across the states.

In most states, minors do not have the right to enter into a contractual agreement, and would not be able to own stocks, bonds, mutual funds, annuities or life insurance policies. In particular, that meant parents were not able to transfer assets to their minor children, but instead must transfer the assets to a trust.

In addition, the IRS allows persons to give up to $13,000 annually to another person without any tax burden. If this recipient person is a minor, the Uniform Gift Act to Minors allows the minor to own the assets without establishing a special trust fund. In essence, a custodial account is established, which functions much like a trust, but is less expensive and less complicated to set up.

Additional legislation, The Uniform Transfer to Minors Act (UTMA), also allows minors to own other types of property, such as real estate, fine art and royalties, and for the transfers to occur through inheritance. It basically extended the definition of gifts beyond cash and securities to include real estate, paintings, royalties, and patents.

The Uniform Gift to Minors Act prohibits the minor from taking control of the gifted assets until age 18, 21, or 25 depending on the state. In Colorado, the age is 21.

A gift transferred to an UTMA account is considered irrevocable, meaning it cannot be taken back. A custodian cannot use UTMA assets for the benefit of anyone other than the minor for whom the account was created. While the funds do not need to remain in the original UTMA account, the custodian must keep these assets separate from all other property and keep records of all transactions related to the assets. A custodian of an account is entitled to be paid for their services.

So which is better, a custodial account or an actual trust? It depends, often custodial accounts are better for transferring small sums, while trusts can handle larger transfers. An estate planning attorney can advise you of the various gifting and tax reduction options available to suit your particular needs.

The Hammond Law Group is a member of the American Academy of Estate Planning Attorneys.

Life insurance can be complex and confusing, not to mention full of unfamiliar terms. Let’s look at the basics of ‘term life insurance’ and the role it can play in estate planning.

Term life insurance is a policy that covers the policyholder for a fixed span of time and upon the death of the insured, assuming the manner of death is covered by the policy, pays the amount of the policy to the beneficiary that was named within the policy. Term life insurance may be purchased for periods of 1 to30 years.

The insurance is paid for with a premium paid by the policyholder. There are two types of premiums for term life insurance:

• Level term premiums which remain constant for the life of the policy.
• Annual renewable premiums which increase as you age.

Normally, level term premiums are higher than renewable premiums in the early years of the policy and lower in the later years when the renewable premiums are increased based on your age.

Term life insurance is normally the least expensive type of life insurance available. It is designed to meet temporary life insurance needs by providing protection for a specified period of time – which makes sense if you have financial needs that will diminish as you age, such as living expenses for spouses and children, mortgages or even a child’s college tuition.

But what happens after the term expires? Well, the idea behind term life insurance is to provide income to people who won’t have income if you are not there to provide it. So, theoretically, by the time your term policy expires, children will be adults and on their own, mortgages will be paid off and the children’s education completed. If you still want life insurance after the term of the policy, you will have to apply for a new policy.

Talk with an estate planning attorney to determine if term life insurance is right for your estate plan. Often, life insurance policies can provide immediate cash for the needs of the estate, such as paying debt, covering funeral expenses and other liquidity needs. Since life insurance policies have a named beneficiary, they avoid probate, the legal process that administers an estate, making them an attractive estate planning tool.

The Hammond Law Group is a member of the American Academy of Estate Planning Attorneys.

Just because you haven’t reached retirement age doesn’t mean it’s too early to begin planning your estate. Your estate plan will help resolve your debts and distribute your assets upon your death. And though we all hope to live a long and happy life, we also know that the future is not guaranteed. Planning your estate now ensures that your estate and your loved ones are protected after you’re gone.

Last Will and Testament

The best tool to begin planning your estate is a Last Will and Testament. This is a basic estate planning document that allows you to name heirs for all of your belongings and stipulate an executor to settle your estate and pay your final debts.

Guardianship

If you have minor children, it is vital to name a guardian in case both you and your spouse should pass away. You can include your guardian plan in your Last Will and Testament or in a Living Trust. A guardian plan ensures your children are looked after by a skilled and willing caregiver without enduring a lengthy court custody battle. Creating a guardian plan will give you the peace of mind to know your children are being cared for. And here’s an extra tip: Don’t forget to name a back-up guardian in case anything should happen to your first choice.

Disability Plan

If you saw the news reports on Terry Schiavo, then you can understand how important it is to create a mental disability plan. Such a plan allows you to name someone to speak for you in the event that you are no longer able to make your own medical or financial decisions. With a disability plan you can name someone to handle your financial affairs, made medical decisions on your behalf and even let your healthcare providers know how you want to be treated in certain end-of-life situations.

Life Insurance

If you pass away, who will help your spouse pay the bills? How will your children go to college? Life insurance is a financial safety net for family members who depend upon you as a source of income. It is best to purchase a life insurance policy in your twenty’s when your premiums will be much lower, and you will have a better chance of being approved.

To learn more about building your own estate plan, contact our office today.

The Hammond Law Group is a member of the American Academy of Estate Planning Attorneys.

If you have children under the age of 18, it’s vital to have a Will that names a guardian just in case something happens to you. This avoids the potentially costly and lengthy process of requiring various family members to go to court and have the court try to determine the best guardian for your children.

In selecting a guardian, it’s important to understand exactly what a guardian does. A guardian enjoys the same legal authority and duties as a parent. Food, clothing, shelter, safety, education and medical care of the children are the responsibility of the guardian until they reach the age of 18.

Guardians educate children in the differences between right and wrong, help them with their homework, settle disputes between siblings and friends and later down the road, will help the children choose a college, help them move out and may even walk them down the aisle.

The probate court generally stays out of the guardian’s way and requires only an annual status report of how the children are coping with their new situation, whether or not they’ve changed addresses and any new changes that the court should know about. There are some things, however, that the guardian must ask permission of the court before doing with the children. If the guardian wished to relocate out of state, for example, they would first need to seek the court’s approval. A family member could also ask the guardianship to be terminated if they thought the guardian was not properly taking care of the child.

Guardians can also receive financial assistance to help support the child. If you set up a trust with your children as beneficiaries, however, their financial future can be secure. You may name the guardian as the trustee of the trust, or designate a separate person to serve as conservator and manage the children’s assets.

You can then turn over the trust funds to the child when they reach age 18, or set milestone ages or education goals throughout their lifetime for them to receive set amounts from the trusts.

An estate planning attorney can help you set up the proper financial accounts to ensure your children’s financial futures and help your named guardian provide the necessary care and nurturing of your child after you pass on.

The Hammond Law Group is a member of the American Academy of Estate Planning Attorneys.

While all divorces aren’t as ugly as the War of the Roses, the process of getting divorced can be at the very least, emotionally and financially draining.

Not only are you faced with the notion of being single again, but you’re also forced to wade through a barrage of legal documents that spell out who gets what and who pays whom.

Now, you might already know who gets the house and how your assets will be split-up, but have you thought about all the other ways you and your Ex are linked?

Chances are, your soon-to-be Ex is the beneficiary on your life-insurance policy. Given that he or she is no longer your spouse, you might want to think about naming a different beneficiary instead. Likewise on your investments and bank accounts with Pay on Death (POD) or Transfer on Death (TOD) clauses as well as your IRAs and 401k accounts.

Remember, these accounts do not have to pass through probate and nothing in your Will affects how the proceeds are distributed. If you don’t change the beneficiary, your Ex will receive the payout instead of your family.

Also, if you are have custody of children under 18, you need to establish a Will or Trust that names your children as the beneficiary and assigns a Trustee other than your Ex. This will ensure than any assets you leave to your children only benefit your children and do not end up in the control of your Ex.

The Hammond Law Group is a member of the American Academy of Estate Planning Attorneys.