Lynn Taylor Rick, Journal staff | Posted: Tuesday, July 10, 2007 11:00 pm
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As a financial planner and a father, Doug Maher knows just how
important it is to have a will.
The father of a 1-1/2-year-old and a 4-year-old, Maher
recently updated his family's will, making changes in the way
assets will be distributed to his children in case he or his wife,
Tamara, dies.
Maher decided to add more specifics to the will. For instance,
if his children attend college, the inheritance will be distributed
differently than it will if they don't go to college. He also
adjusted the ages at which his children will receive their
inheritances. Instead of receiving it all at once as a young adult,
assets will be distributed over a longer period and when the
children are more mature.
Although Maher recognizes that some young adults can handle
suddenly inheriting money, but he believes that most benefit from
having it delayed into their mid 20s.
Maher made the changes to his family's will after personally
witnessing the conflicts that arise in families who have vague
estate planning.
"I just wanted to limit some potential mistakes along the
way," he said.
No one wants to make a will or plan their estate. And in fact,
a lot of Americans simply don't do it.
An estimated 55 percent of adult Americans have not prepared a
will, according to a new study by Harris Interactive, a market
research and polling company.
Rapid City attorney Tina Hogue is surprised at the number of
people who have not prepared a will, especially parents who have
young children.
"I think people just don't like to address that … the
possibility of their death," she said. "It's incurring an expense
that doesn't give you any direct immediate gratification. It takes
time and costs money, and people don't like that."
Hogue said families with young kids need to recognize that if
they don't choose a guardian for their children, the state
will.
If they don't plan and document who will inherit their assets,
the state will do that, as well, Hogue said.
In the case of guardianship, the court will make a decision
based on the best interest of the children, Hogue said. If a couple
designates in their will a guardian that the court deems
unsuitable, that choice can be altered in spite of the will. But in
most cases, Hogue said, the court will uphold a guardianship
request as long as the children will be cared for
appropriately.
"It's not iron-clad. The people you chose need to be capable
at the time," she said. "The court always looks at the best
interest of the child."
Hogue recommends that people always discuss guardianship of
children with the potential guardian. Make sure that the potential
guardian is willing and able to take on the responsibility.
Maher agrees. "I think it's important that they feel
comfortable accepting responsibility ahead of time," he said. "It's
important that they would raise the children the way you want them
raised."
It's also a good idea to discuss that decision with other
family members, Hogue said. That way, everyone understands the
parents' preference.
When it comes to assets, it's critical to document wishes with
estate planning and a will, Hogue said.
Although it's important for everyone, it's particularly
important for blended families, Hogue said. Blended families can
avoid a lot conflict with good estate planning.
"That can cause major issues if you don't do your asset
planning," Hogue said. "Making sure that the person who passed away
- that everybody understands what his desires were. There can still
be hard feelings, but it's a lot better to be disappointed than to
fight … thinking you are entitled to something you really
weren't."
There are plenty of other elements to be addressed in good
estate planning, such as living wills and powers of attorney.
But the main thing that people need to understand is that
estate planning is critical, Maher said. Families need to make it a
priority and take the time to ensure that their affairs are in
order.
"Life is going to take over between soccer games and church
and family," Maher said. "They just have to make sure
they take the time to get it done."
12 things every parent should know
about guardianship
Picking a trusted adult to take care of your children if you
can't is the most important estate-planning task on your list. Here
are things to consider as you make this important decision.
1. What does a guardian do? If you and
your child's other parent both die, or if you die as a single
parent, someone must be legally responsible for your child. A
guardian has the legal authority and responsibility to care for a
child just as a parent does, providing food, shelter, education,
and medical care, and ensuring their safety and comfort until age
18.
2. However, guardians are not legally
responsible for the financial support of children in their care.
That's why it's so important to provide for children financially by
buying life insurance or creating a trust.
3. What happens if I die without naming a
guardian? A judge will appoint a guardian for your child, usually
the nearest able relative. Disputes can arise when more than one
family member wants custody.
4. Who guards the guardian? Guardians
must file annual status reports with the courts, reviewing how the
children are doing and where they're living and also must alert the
court to any changes that have occurred since the guardianship
began. Any family member who feels that the guardian isn't taking
adequate care of a child can ask the court to terminate the
guardianship and appoint someone else.
5. Choosing the right person. When making
your decision, consider the personal qualities you want in a
guardian. Make a list of the qualities that are most important to
you and rank candidates in each area, e.g., humor, patience,
intelligence, religion, health, home, and whether they have
children of their own.
6. What about godparents? Godparents are
important people in many children's religious lives, but they have
no special legal standing. If you want to nominate your child's
godparent as a guardian, you must do so in your will.
7. Forget about what could happen in 10
years. Many parents find it easier to come up with potential
guardians if they focus on who could take care of their children in
the next three to five years. You can designate a new guardian as
circumstances change in the future.
8. Forget about the money. Sometimes,
parents hesitate because the person they like best is not a good
money manager. That problem is easily fixed: name a financial
guardian to manage your children's money and leave the guardian
with the job of making sure your child grows up well cared for and
happy.
9. Name the individual, not the couple.
If you prefer one person in a couple over the other, name the
person you most want. If the couple divorces, your kids stay with
the person you feel closest to.
10. Name a temporary guardian, too. With
today's scattered families, it's common to select a guardian who
lives in another state or even another country. But out-of-state
and foreign designations can take longer for the courts to approve,
so if you want to name someone who lives far away, you should also
nominate someone local to serve as a temporary
guardian.
11. What if you have a blended family?
Some parents name different guardians for the children of different
marriages; others make a plan that would keep all the children
together. Use the children's best interest to guide your decision
and remember that guardianship doesn't come into play at
all if a child has a surviving parent.
12. Still can't decide? If no one left on
the list is the obvious choice, pick the person you feel most loves
your children and that your children most love. Listen to what your
heart tells you.
This information is from "The Busy
Family's Guide to Estate Planning: 10 Steps to Peace of Mind" by
attorney Liza Weiman Hanks.
