Most District of Columbia parents want to be sure that their children are provided for after their deaths. However, many of them are unsure how to achieve this goal. Estate planning can accomplish this goal using three tools: wills, trusts and beneficiary designations.
Some assets such as life insurance policies and retirement accounts require the owner to fill out a beneficiary designation form. This form will control who receives the proceeds of the account upon the benefactor's death. It is important to note that this form will overrule any provision in a will or trust regarding who will inherit this account. Therefore, it is crucial to periodically review these forms to determine whether the person listed is still the intended beneficiary.
The remainder of an individual's assets can be passed through a will and/or trust. Specific bequests can be made in a will with the caveat that the heir will receive the entire asset at once, which may not be what the individual would prefer. This is where trusts can be invaluable.
The asset can be held by the trust, and distributions can be made on a schedule set by the trust's creator. This can be especially useful for District of Columbia parents who have minor children, a child with special needs or a child who is not good with money. Restricting when and how distributions are made can ensure that a child receives as much benefit from his or her inheritance as possible.
Every family dynamic is different, which means that no two estate plans are exactly alike. Often, the seemingly minor nuances make all the difference. Consulting with an attorney who regularly does estate planning could help create a plan that gives a parent -- and a child -- peace of mind.
Source: The Huffington Post, "How to Leave Your Children an Inheritance", Steve Cook, July 8, 2015