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I'm Only 35. Do I Need an Estate Plan?

This article discusses the right time for a young family to start estate planning.

I'm Only 35. Do I Need an Estate Plan?
Vince Taormina

The other day I ran into a family friend of ours in the park across the street from my apartment building.  She was walking her two-year old in the stroller, trying to get some fresh air despite still being forced to work from home due to COVID-19.  As she asked me what I was doing these days, I promptly told her that I was an estate planning attorney with my own law practice.  That’s when she asked me: “You know, I’m only thirty-five.  Do I need an estate plan?”

There’s a common misconception among young people—parents or otherwise—that estate planning conversations are reserved for their parents and grandparents. This is only natural.  No one wants to think about their death, especially not young people.  As a young person myself, I can say from experience that we feel invincible, that nothing will ever stop us, that death is too far down the road for us to start worrying about it.  But, as the old saying goes, “There are only two certainties in life: death and taxes.” Luckily, both the effects of both certainties can be mitigated with proper estate planning.

To better understand why estate planning is so important for young people, we need to look at three different topics: Intestacy, Guardianship for minor children, and Testamentary Trusts.

“Intestacy” means dying without an estate plan in place.  Any property not governed by an estate plan is considered “Intestate Property.”  Missouri Revised Statute § 474.010 governs the distribution of Intestate Property.  Most married couples assume that if one of them dies, the remaining property will automatically go to the surviving spouse.  That is not the case under RSMo.§ 474.010.  Here’s what the surviving spouse receives if the person dies Intestate:

  1. The entire estate if the decedent is not survived by children OR
  2. Twenty Thousand Dollars ($20,000.00) in the value of the Intestate estate, plus one-half (1/2) of the balance of the estate if the decedent is survived by children, all of whom are also the children of the surviving spouse. 

In other words, if a decedent dies Intestate and has children with the surviving spouse, the spouse only receives half of the decedent’s property while the children receive the other half.  This is obviously not ideal.  Having a proper estate plan, one in which the surviving spouse receives the whole benefit of the decedent’s estate, is the only way to mitigate against this strange outcome under the statute.

The second topic to examine is guardianship for minor children.  There are two concepts at play here: “Guardianship” and “Conservatorship.”  Guardianship refers to having physical care and custody of the minor.  Conservatorship refers to having care and custody of the minor’s estate.  Yes, even minor children have estates.  In terms of estate planning for families with minor children, the Guardian and Conservator will usually be the same person.

So, what happens if young parents die without an estate plan before their children turn eighteen?  Well, a guardianship action will have to be opened in court.  Once that action is opened,the court, and not the deceased parents, will decide who is best equipped to care for the deceased parents’ minor children. The court will employ a legal standard known as the “best interest of the child” standard to make that determination. The problem with this method of Guardianship, however, is that the court does not know the dynamics of the family relationship.

If, however, a young couple die with an estate plan in place, the court is required to abide by the Guardianship provisions of that estate plan.  This is because parents, and not a court, know what is best for their children.  While a court might presume that a child’s grandparents are best suited to serve as Guardian, many young parents do not wish to burden their own parents with the responsibility of raising a young child all over again.  In fact, most of my young clients decide to appoint their siblings or friends as Guardians of their children in their estate planning documents.

Lastly, proper estate planning allows young people to set up Testamentary Trusts for their children.  A Testamentary Trust is a trust that comes into existence after death.  A Testamentary Trust can be formed in either a Revocable Living Trust or a Will.  For all of my young clients with young children, I always recommend including a Testamentary Trust provision in their estate planning document.

Testamentary Trusts are funded after the death of a decedent.  In planning for young couples, the Testamentary Trusts for children will only be funded after the deaths of both parents.  In this scenario, when the young parents die, their assets will be placed in Testamentary Trust for the health, education, support, and maintenance of their surviving young children until those children reach a certain age.  Although eighteen is the age of majority in Missouri, most young parents do not want their kids to receive such a substantial amount of money at eighteen. Instead, they arrange the Testamentary Trust so that the assets of the trust are distributed over a period of time. For instance, the child may receive ¼ of the trust assets at 21, ½ of the remaining at 23, and the rest of the trust at 25.  This gives parents flexibility in planning and protects the children from blowing all of the trust assets immediately upon their parents’ deaths.

In short, estate planning is incredibly important for young people, especially those with children.  It prevents the rather unjust laws of Intestacy, it provides for Guardianship of minor children, and it guarantees the protection of assets for minor children through Testamentary Trusts.

So, if you ever ask yourself, "I'm young. Do I really need an estate plan?" the answer is a resounding: YES!

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