Leaving Assets to Your Children

As an experienced estate planning lawyer in Folsom, one of the most common situations that I encounter is clients wanting to leave their assets to their children. This can be after the passing of their spouse, if they are married, or outright. Leaving assets to your children through an estate plan is a thoughtful and important aspect of ensuring their financial security and well-being. Here are steps to help you create an estate plan that accomplishes this goal:

1. Assess Your Assets and Financial Situation:
   • Start by taking inventory of your assets, including bank accounts, investments, real estate, retirement accounts, life insurance policies, and personal property. Understand your financial situation and how your assets are structured.
2. Create a Will or Trust:
   • A will or trust is the foundation of your estate plan. It allows you to specify how you want your assets to be distributed to your children. Consider the following:
     • Will: A will outlines your wishes for asset distribution and allows you to appoint a guardian for minor children. It goes through the probate process.
     • Living Trust: A trust, such as a revocable living trust, can provide more control over asset distribution, avoid probate, and specify when and how your children will receive their inheritances. For most clients, a living trust is far more beneficial than a will. 
3. Designate Beneficiaries:
   • Review and update beneficiary designations on retirement accounts, life insurance policies, and other financial assets to ensure they align with your wishes for your children.
4. Appoint Guardians:
   • If you have minor children, designate a guardian in your will to care for them in the event of your passing. Discuss this decision with the chosen guardian in advance.
5. Consider Testamentary Trusts:
   • Within your will, you can create testamentary trusts for your children. These trusts become active upon your passing and can be used to manage and protect assets for your children until they reach a certain age or milestone. Contrast a testamentary trust with a living trust, the latter of which is effective during your lifetime. 
6. Set Up Custodial Accounts:
   • For minors, consider establishing Uniform Transfers to Minors Act (UTMA) or Uniform Gifts to Minors Act (UGMA) accounts, which allow you to transfer assets to them while maintaining some control until they reach adulthood.
7. Estate Tax Planning:
   • If your estate may be subject to federal or state estate taxes, consulting with a tax advisor, in addition to an estate planning attorney, can help you to understand strategies to minimize or defer these taxes while maximizing your children’s inheritances.
   • In California, there is no state estate tax, however the federal estate tax is levied on estates valued at over $13.61m as of 2024.
8. Digital Assets and Passwords:
   • Plan for your digital assets, including online accounts and passwords, and make sure your children or the executor/trustee of your estate can access important information.
9. Regularly Review and Update:
   • Periodically review and update your estate plan to reflect changes in your financial situation, family circumstances, and wishes. Life events such as births, marriages, or divorces may require adjustments to your plan.

Conclusion 

Remember that estate planning is a complex process, and the specific steps you take may vary based on your unique circumstances and goals. Seeking the assistance of an experienced estate planning attorney in Folsom who can help you create a comprehensive plan tailored to your children’s needs and your individual goals is recommended. If you have any questions about estate planning and leaving assets to your children, contact Thapar Law at 916-579-0605 or send us a message.