Young Family Wills
© 2007 Kevin E. Houchin, Esq.
When I get asked the same question 5 or six times in the same week, I know it’s the topic of my next column. This week’s question has been, “what information do I need to give you to do my will.” It’s come from folks in my circle of friends, and since I have young kids, most of my friends are in the same situation. If you have kids under 18, and you’re not worth several million bucks, then this article is for you. If you don’t have kids, it gets easier. If you have several million bucks, call me!
So, there are 4 main questions that need to be answered:
1. Who will clean out your garage?
2. Who will raise your kids?
3. Who will handle the money for your kids?
4. When can the kids handle the money for themselves?
Most of my friends are married, and in Colorado everything goes to your spouse anyway, so the real issue is what happens if BOTH of you pass at the same time. Hey, we live next to I-25 and we get on airplanes. Stuff happens. Accordingly, the default answer to all the questions above is your spouse is something happens to you, and then we name an alternate or two in case your spouse is not available to handle the tasks.
One thing to keep in mind is that these roles can all be delegated to the same person, or they can be assigned to different people. The choice is yours.
Who will clean out your garage?
The person that has to take care of handling all you stuff is called the “Personal Representative.” This person should be local so they can show up at the courthouse, work with the lawyer to transfer your assets to their appropriate destinations, and yes, clean out your garage. It’s an gig that lasts around a year or two.
Who will raise your kids?
If your kids are under 18 when you and your spouse pass on, your kids need to live with someone. If YOU don’t make the choice, the Court will make the choice for you, and you might not be happy with the decision. You should designate one person as the first choice, and one as the second. Don’t name couples, because they might split up – you never know. This person will have your kids until they’re 18, so choose someone that you believe to be a good stand-in parent.
Who will handle the money?
Assuming you have some assets and maybe some life insurance, you might be dropping some serious money on some young kids. I know I don’t want to hand my life insurance benefits to a 12 year old, so the assets need to go into a “trust” for the “benefit” of my kids until such a time as I think they can handle the money themselves. The person that handles the money is called the “Trustee” and is on the hook until the terms of the arrangement are satisfied. This person generally has very broad discretion to use the money for the benefit of your kids, so pick someone financially responsible and that you, well – TRUST.
When do the kids get the money?
It depends on how much you think they’ll get. If they’ll only end up with a few grand, then it’s not worth the effort to make someone be the trustee. If you’ve got a couple million in life insurance, then it’s a different story. I like to “distribute” principal funds from the trust as follows: 1/3 at age 21, ½ of what’s left at age 25, and the full balance, which terminates the trust and lets the trustee off the hook for keeping the checkbook, at age 30. Some other attorneys like to do the same at 25, 30, and 35. There are no “rules” for this. I like 21 because it would make a great college graduation gift, 25 because there might be graduate school, a house down payment, or kids coming along, and 30 because by that age the trustee should be off the hook, and my kids should know how to manage money. Along those lines, it’s good to set an amount of the trust balance, say $50,000 below which the trust is simply terminated and the funds distributed to the kid(s).
Those are the major questions relating to wills for young family’s. Of course you’ll need to give your lawyer full names, birthdates, etc for the family too. You do NOT have to give them a full accounting of your assets. Most wills are written to basically throw your assets into a “bucket” and then discuss how to divide the bucket. The will document should also make reference to an outside document that you keep with the will that acts as a running list of who gets the silverware and other tangible personal property. These things CAN be added in the will document itself, but generally aren’t – doing so just adds to the legal fees now and later.
Please be aware that for a will to be worth the paper it’s printed on, there are certain formalities that need to be followed in the signing process, such as the signor needs to make certain declarations, with the witnesses present, etc. This ceremony is why you hire a lawyer to help and coordinate the process.
While your at it, you should also complete 3 other documents. A General Durable Power of Attorney lets your spouse sell your stuff to pay bills if needed. A Durable Healthcare Power of Attorney that lets your agent make healthcare decisions for you if you’re unable. And a “living will” that lets everyone, especially your doctors, know your wishes if you are terminally ill and unable to make decisions for yourself.
These can be difficult questions to answer – practically and emotionally. However, when you think about a Court making the decisions for you, it’s a real motivator to get these documents completed.
Kevin E. Houchin is principal of Houchin & Associates, PLLC – a copyright, trademark, arts & entertainment, business development, and branding firm located in Fort Collins, Colorado. To contact Kevin, call 970-493-1070 or email email@example.com. Yes, he does wills for young families too.