Why Estate Planning Should Be Part of Your Vacation Checklist
New Orleans CityBusiness published Katie DeBlanc's guest perspective "Why Estate Planning Should Be Part of Your Vacation Checklist." The article can be found on the City Business website here or the full article is below.
With the arrival of summer, many families have plans to travel domestically or even abroad. An upcoming vacation brings with it lots of planning: securing transportation and lodging, making a packing list, coordinating schedules and more. Estate planning usually does not come to mind when thoughts of fun predominate, but maybe it should.
No one likes to consider what could go wrong, but traveling anywhere, especially longer distances, always poses some risk. It is prudent to have an estate plan in place in the event that something occurs.
If you have not executed a will, Louisiana's intestacy laws will divide your property among your close relatives. Under these default rules, for example, your separate property (e.g., property acquired before marriage or by gift) passes to your children, not your spouse. Moreover, your spouse will lose his or her right to enjoy your one-half of any community property upon his or her remarriage. These Louisiana default rules may not protect your spouse's financial future as you intend. Therefore, completing your estate plan before a big vacation can provide peace of mind that your family will be properly cared for, allowing you to fully enjoy your time away.
Contrary to popular belief, having a proper will in place is not just for older adults. Estate planning for couples with young children is critical to ensure that a child's inheritance is protected and to ensure that that upon the death of both parents, a trustworthy person will be appointed to care for the child.
When a parent dies with a minor child and without a valid will, the child's tutor will receive and administer the child's inheritance on behalf of the child. Under Louisiana law, a tutor is the individual legally responsible for the child's care and management of his or her assets upon a parent's death. When one parent dies, the other parent becomes the tutor of the child. If both parents die and the last-to-die parent has not named a designated tutor in his or her will or other valid declaration, then the court shall appoint a tutor for the child. While the court's primary consideration in making this determination is the child's best interest, it will never know the child as well as the parents did. Rather than leave such a critical appointment to the discretion of the court, each parent should designate a tutor in his or her will. Young parents will also be comforted that a person they know and trust will manage their minor child's assets and accounts until the minor is capable of doing so. This will also minimize the risk of financial mismanagement by someone selected by the court as tutor.
A proper will typically includes a trust with a designated trustee or co-trustees to administer a child's inheritance until the child develops the financial wherewithal and maturity to do so themselves. While trusts are often viewed as estate planning mechanisms only for the ultra-wealthy, this is another misconception. Rather, testamentary trusts, trusts included within wills, are very common devices for individuals of any economic background. Furthermore, a testamentary trust can be structured to distribute a child's share of the estate in stages (e.g., certain fractions of his or her share of the estate at certain ages). Such a tiered termination allows the child to have access to larger portions, maybe make mistakes and blow a portion of his or her inheritance, but not imperil the entire share. Finally, testamentary trusts can be drafted to include provisions to incentivize certain behaviors and to protect against others (e.g., distribution of assets upon accomplishing certain educational milestones or limiting the distribution of assets if a beneficiary has a documented substance abuse disorder to distributions only necessary for health, education and well-being). At their very basic level, testamentary trusts are critical to preserve the inheritance of certain children. As highly customizable instruments, testamentary trusts can also offer added value to an estate plan by encouraging in beneficiaries proper behaviors and discouraging problem habits.
So, in between booking your resort massage and creating your packing list, consider making an appointment with a qualified trusts and estates attorney to prepare or update your will. You will feel relieved to know that your spouse and children will be protected if something happens to you.