Archive for September, 2009

Why Your Child Should Not Inherit Large Sums of Money at 18

Posted by in Estate Planning, Living Trust on September 25th, 2009

At age 18, your child is an adult by law and possesses newly acquired legal rights.  One legal right is that your child is now allowed to inherit the full amount of whatever he or she is entitled to under your will or by intestacy laws.  Whether it be a large savings account or life insurance, your adult child will inherit the entire lump sum.  And by allowing your child to inherit this large sum of money at 18, you are giving them complete control over your money.  This is an idea that should unnerve most parents.  Think about the temptations you personally would have faced at 18.  Suddenly, hundreds of thousands of dollars is yours without a parental eye watching over you.  A will alone will not have the power to dictate your child’s spending decisions.  The money will be in the hands of your child without any binding instructions or rules.  As you look at your child, think about whether your child would be responsible and spend it on his or her education or blow your money living like a rockstar?  In most cases,
 
If you were not intending to give them control over such a large sum of money when they turned 18, why allow that to happen should you not be around.  Your child does not have to face this type of temptation.  You can still control the financial future of your child, deciding when and how much your child will receive, by putting a trust in place.  By creating a trust you can make the financial decisions for your child such as setting aside money for college, or whatever you may want for your child.  More importantly, you can keep the money out of your child’s hands until you feel that he or she is ready to handle and manage your money wisely or according to your intentions.  Planning ahead gives you the control you want so that you feel secure about your child’s financial future. 
Contributions from Joyce Park

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When Probate Can Be A Good Thing

Posted by in Estate Planning, Probate on September 25th, 2009

For most people, avoiding probate is generally the better course to take in creating an estate plan. However, in rare instances probate may actually be the better course. Michael Jackson’s estate seems to be one of these rare cases.

One of the main benefits of probate is that the entire process is under court supervision. For most small to mid-sized estates, this may be an unnecessary and lengthy process. But conversely, where an estate is substantial in size and plagued with a long list of creditors, court supervision can help smooth out problems. Court supervision guarantees an accurate accounting of the assets and debt and will greatly deter false creditor claims from being filed against the estate. And even better, if a creditor’s claim is not asserted within a four month period the claim is barred forever.

Michael Jackson’s estate is rumored to be worth $500 million but more than half of that amount ($300 million) is owed to creditors. Yet, Michael Jackson’s apparent desire to keep his estate administration out of the public eye took precedence over warding off bad creditors and frivolous lawsuits.

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