If you have children, one of the most important parts of your estate plan is your Will, with which you nominate a guardian to care for your kids in the event both you and your spouse pass away. Many parents make a Will naming a guardian while their kids are babies or toddlers, and never reevaluate their choice. This is not a good move.

Think about how many things change in a family’s life between the time a child is born and the time that child reaches the teen years. The child has developed their own unique personality, preferences, relationships, and activities. The person originally named as guardian might have moved away, your families may have grown apart, or they may simply no longer be in a position to serve as guardian.

This is why every few years, or when your family experiences a major life event like a marriage, a divorce, a new baby, or even a move, you need to reevaluate your estate plan – including your choice of guardian – to make sure it’s still the best plan for your family.

What if you review your plan and discover that changes need to be made? You’ll want to make an appointment with a qualified estate planning attorney who can help you fully evaluate your current needs and bring your estate plan up to date.

Robert J. Kulas, P.A. Attorneys at Law is a member of the American Academy of Estate Planning Attorneys.

Did you know that a minor child can have a Roth IRA? Of course, the child can only contribute as much as he has earned in any given year (up to $5,000), but in a recent Forbes article, William Baldwin suggests using a Roth as a strategy for building wealth for your children. Here’s a summary:

If you have a child who is old enough to work, strike this deal: for every dollar your child earns, you’ll contribute a dollar to his Roth IRA. Your child gets to spend his  earned funds as he normally would. Money going into a Roth IRA is not tax-deductible, but this likely won’t make a practical difference, because most teenagers don’t have enough income to pay income tax anyway. The true benefit of a Roth is that future withdrawals, including withdrawals of interest earned on account contributions, are completely tax-free as long as your child heeds applicable IRS rules.

So, if your child waits until after he reaches age 59 ½ to take money out of the account, there will be no taxes and he’ll get the benefit of many decades’ worth of growth. Of course, Baldwin points out, you’ll want to be aware of the effect this plan will have on your child’s ability to qualify for college financial aid; and, this is not a great move for parents who are not already fully funding their own retirement accounts.

Robert J. Kulas, P.A. Attorneys at Law is a member of the American Academy of Estate Planning Attorneys.

Have you and your spouse ever taken separate flights to the same destination when you’re traveling without the kids, because you’re afraid of what might happen to them if you both died in a crash?

This Omaha World-Herald article talks about just this situation. Turns out, quite a few parents use this approach. If you fall into this group, here’s some food for thought: would it make your travels easier if you had a reliable estate plan in place?

As a parent, providing for your kids through an estate plan means, at a minimum:

• Having a Will that names a guardian to care for your children in case the unthinkable happens
• Ensuring that your plan names a reliable person to manage your children’s inheritances on their behalf
• Having a temporary medical power of attorney authorizing your children’s babysitter to seek medical attention for them if necessary

Your estate planning attorney can help make sure your plan covers all the bases, so that you and your spouse can have peace of mind…and take the same flight.

Robert J. Kulas, P.A. Attorneys at Law is a member of the American Academy of Estate Planning Attorneys.

If you’re the parent of a child with autism, you’re not alone. It’s estimated that one out of every  110 children, and one out of every 70 boys, has some form of autism. You’re familiar with the day-to-day challenges and rewards of bringing up a child with this condition, but what would happen to your child if you were no longer in the picture?

It’s something no parent wants to think about, but for parents of kids with autism or other special needs, planning for the unthinkable is incredibly important. First, there’s your child’s emotional well-being to consider; if you pass away without nominating a guardian for your child, that decision could be left up to a judge.  This is not the ideal scenario for any child, but it can be especially detrimental to pair an autistic child with a guardian who is not familiar with the condition and who does not know the child. This is why you should hand-pick a guardian who knows your child and who you’re convinced would do the best possible job of providing care in the event of your death.

Aside from the emotional concerns, there are significant financial concerns when it comes to children with special needs. For instance, it’s important to ensure that your child’s medical and therapeutic needs will be provided for even after you’re gone. However, the manner in which you leave your child an inheritance can have a huge impact on his or her quality of life. If your child receives SSI, Medicaid, or other government-funded benefits, leaving more than just a minimal amount of money or assets directly to your child can disqualify him or her from those benefits until the inheritance is used up. This can wreak havoc on your child’s lifestyle at an already difficult and stressful time. One solution to this problem is to establish a special needs trust for your child, rather than simply leaving a direct inheritance.

Making sure your autistic child is protected and provided for, even in the face of unexpected circumstances, can seem like an overwhelming task. Fortunately, you don’t have to figure it out on your own.  An experienced estate planning attorney can explain all your options and help you put together an estate plan that will work when it’s needed.

Robert J. Kulas, P.A. Attorneys at Law is a member of the American Academy of Estate Planning Attorneys.

Imagine you have a loved one – your daughter, for instance – who has special needs. And, imagine your loved one gets government benefits, like Medicaid, to help cover the cost of her care. These benefits don’t generally put money in your daughter’s pocket. Instead, in most instances, they are paid directly to the professionals who provide services to your daughter. You, as your daughter’s parent, provide all the additional support (financial and otherwise) that enhances your daughter’s quality of life and ensures that she does not live in poverty, with only her basic needs met.

Now, imagine what would happen if you passed away and left an inheritance directly to your daughter. Even a modest inheritance would disqualify her for the government benefits that pay for her basic care. She would need to exhaust her inheritance before she could once again qualify for benefits. But with you gone, there would be no inheritance left and no one to provide all the extra support that you provided during your lifetime. Your daughter could very well face a life where only her basic needs were taken care of.

This is why, instead of leaving an inheritance directly to a loved one with special needs, it’s a good idea to establish a special needs trust for that person. Once a special needs trust is set up, you put your loved one’s inheritance in the trust, which is irrevocable. Instead of being paid directly to your loved one, the inheritance is managed by a trustee, who follows strict rules in using trust funds to supplement your loved one’s income and lifestyle. This way, your loved one continues to have access to government benefits, but can enjoy the same quality of life after your death as he or she did during your lifetime.

In order to be effective, a special needs trust has to be established and managed in compliance with some very stringent rules. If you’re considering a special needs trust, you’ll want to enlist the help of an experienced estate planning attorney to make sure that you don’t run afoul of these rules.

Robert J. Kulas, P.A. Attorneys at Law is a member of the American Academy of Estate Planning Attorneys.

Parents with young children have quite a few difficult decisions to make when it comes to estate planning. Not only do you need to figure out who should take care of your children in the unlikely event you pass away before they’re old enough to care for themselves, you also have to put a plan in place to provide for your kids’ financial well-being in the event you can’t be there.

For some parents, the solution is simple: there’s a trusted friend or family member whom they can rely on completely, both for bringing up their children in a healthy, loving home and for responsibly managing the inheritances left for the children.

For other parents, though, the circumstances are a little more complex. Perhaps there’s a  family member who is fantastic with the children, and would make a great guardian, but that person is not too reliable when it comes to money management.

The good news is that you don’t have to name the same person to take care of your kids’ personal needs and to manage their finances. You can name one person as guardian, and  a completely different person – one who will make the best financial decisions for your kids – to serve as trustee or custodian for inheritance purposes.

To make sure your children get the best of both worlds, you’ll want to choose a guardian and a trustee who can work well together in the interests of your children.

Robert J. Kulas, P.A. Attorneys at Law is a member of the American Academy of Estate Planning Attorneys.

Part of your role as a parent is to prepare your child for a successful adulthood, including protecting him from his own inexperience and immaturity. This is why many parents choose to leave an inheritance for a minor child in a testamentary trust, to be released when that child is old enough to responsibly manage the money or assets.

At the time you establish this type of trust, you’ll specify how the trust assets are to be managed, and under what circumstances they are to be used on your child’s behalf or distributed to your child.

For many families, it’s important to build flexibility into a child’s trust, and here’s why:

No one can predict the future, and while you’re alive and well you have the ability to respond flexibly and creatively to the life choices your child makes, and the circumstances in which he finds himself from year to year. However, as a practical matter, what would happen if you passed away?

After your death, your child’s finances would be in the hands of a trustee who would be obligated to adhere to the instructions contained in the trust when making decisions for your child. If a trust is too restrictive, it can tie a trustee’s hands, making it difficult to respond effectively to the multitude of different circumstances that can arise as a child grows up.

How do you build flexibility into a trust? If you select a trustee in whom you have confidence, you can establish the trust so that it allows him or her discretion in making financial decisions for your child. This way, your trustee can use his or her judgment to make appropriate choices when it comes to spending trust assets on a new hobby, an important purchase, or even the timing for terminating the trust. Of course, the amount of discretion you afford to the trustee is up to you.

Your estate planning attorney can help you put a trust in place for your child that will provide the right balance of protection and freedom.

Robert J. Kulas, P.A. Attorneys at Law is a member of the American Academy of Estate Planning Attorneys.

A 529 plan is a tax-free account established for the express purpose of paying the expenses of higher education for a child, a grandchild, or another family member.

Money invested in a 529 plan grows tax-free, and the account can be used to pay for “qualified” higher education expenses, including books, tuition, fees, and supplies.  What counts as “higher education”? College, graduate school, or an approved vocational school all qualify.

You can contribute up to $13,000 per year to each beneficiary’s 529 plan without paying gift tax or triggering gift tax reporting requirements. If you’re married, you and your spouse can contribute up to $26,000 per year per beneficiary.

There are some significant drawbacks that accompany 529 plans, including:

• Plans can impose high management fees.
• A different plan is offered by each state, and the rules and requirements can vary a great deal from state to state. You’re not limited to using your state’s plan, so you’ll want to carefully research your options.
• Each state’s plan has its own rules as to which investment options are available, and these investment options can be limited.
• Money withdrawn from a 529 plan for any purpose other than paying for a beneficiary’s higher education expenses will result in taxes and penalties.

Before investing in a 529 plan, you’ll likely want to get the advice of an experienced advisor. It’s important to be aware of the advantages and disadvantages of the various plans, and it’s also important to be aware of other options for investing toward a loved one’s education.

Robert J. Kulas, P.A. Attorneys at Law is a member of the American Academy of Estate Planning Attorneys.

If you’re the parent of young children, your estate plan serves a special purpose. With it, you designate a guardian who will take care of your children if they’re orphaned before they reach adulthood, and you make a plan to provide financially for your kids if you pass away.

How it Works

When it comes to providing for your children, one option is a Family Pot Trust. This is a single trust that you establish for all of your children to share. The reason that it’s called a Pot Trust is that, instead of establishing a separate trust for each child, your family assets are put in a “pot” for the use of all your minor children. The trustee then has discretion over how the trust funds will be spent.

With a Pot Trust, the funds don’t have to be divided equally among your children, and the trustee can decide to spend more on one child than on another. This can be a huge benefit if you have one child with unique medical needs, or with special educational needs. The flexibility offered to your trustee can also be a drawback – he or she might have to make tough choices about spending more to meet the needs of one child. And, this unequal treatment might be seen as unfair by your other children.

When it Ends

Because the purpose of a Family Pot Trust is to provide for all your children while they’re still children, the trust doesn’t generally end until your youngest child reaches legal adulthood.

If you have young children, you might want to ask your estate planning attorney whether a Family Pot Trust is right for you.

Robert J. Kulas, P.A. Attorneys at Law is a member of the American Academy of Estate Planning Attorneys.

Intestacy is the legal term for dying without having a valid Will in place. You can die “intestate” for two reasons:

• You didn’t make a Will while you were alive and had the mental capacity to do so; or
• You made a Will, but it wasn’t valid. This can happen when your Will is not properly signed or witnessed, or if you made your Will without the legal capacity to do so – for instance, if you didn’t have the mental capacity to understand what you were doing.

How Intestacy Works

So, what happens if you die intestate?

• The state has special laws, called “intestacy statutes” that determine how your property is distributed. Generally, your property goes to your closest relatives, such as your spouse and children.
• If you have minor children, and they’re left without a living parent, then a judge decides who will serve as your children’s guardian. The guardian takes care of your children and manages their finances for them until they reach legal adulthood. Generally, one or more family members will ask to be named guardian, and it’s the judge’s job to determine who is most fit for the job.

Reasons to Avoid Intestacy

For anyone who has more than the simplest of situations, estate planning is essential. Here are just a few examples of why dying intestate can be the last thing you need:

• Unmarried Couples. If you’re in a same-sex relationship, or even in a heterosexual relationship and you’re not married to your partner, then dying without an estate plan could mean that your partner gets nothing. Instead, your property would go to your blood relatives.
• Parents with Young Children. As discussed above, if you pass away leaving your children without a parent, your kids’ fate will be decided by a judge who doesn’t know you or your family. So, your kids could end up with someone you never would have chosen.
• Separated From a Spouse. What if you and your spouse are separated, but not divorced? Without an estate plan that says otherwise, at least part of your property will go to your spouse – who just might be the last person you want to receive it.
• Children from a Previous Marriage. If you’re married but have children from a prior relationship, your spouse could get the bulk of your estate under the intestacy statutes. If you want your children to get a larger share, you’ll need an estate plan.

Robert J. Kulas, P.A. Attorneys at Law is a member of the American Academy of Estate Planning Attorneys.