For those who love their stepchildren as their own, it may come as a surprise that this bond isn’t enough when it comes to estate planning in Georgia. Because of the laws of inheritance, stepchildren do not automatically inherit when a stepparent dies.
Let’s say you’re creating your estate plan, and you stipulate that your estate should be divided equally among your children. The courts will typically only apply that to any biological children you may have, completely ignoring any claim from stepchildren. In these cases, it’s nice to think that the biological children would share, but it’s definitely not a foregone conclusion. Even if they did, there would be additional tax implications for all involved.
On the other hand, if you don’t have any biological children, your Atlanta will lawyer will tell you that your stepchildren will still not have any rights to your estate. Instead, it would pass to your spouse, your parents, your siblings, or even your cousins, rather than to the young people you helped to raise.
Should you wish for your stepchildren to receive an inheritance, you must make your wishes clearly, and legally, known. The most common way to do this would be to have a will lawyer in Atlanta draw up a will that outlines exactly what you want to happen with your estate. The document will need to be witnessed, and your attorney may advise you to take other precautions to make sure the will holds up when the time comes.
Another approach to estate planning for stepchildren would be to create a trust that names them as the beneficiaries. Trusts can be funded in a number of ways, such as with savings or assets; or they can be funded through life insurance. Various accounts, such as bank accounts, insurance policies, or IRAs can also be left specifically to stepchildren as long as the stepchildren are named as beneficiaries.
Adopted children do not face the same difficulties as stepchildren, as they are treated just like biological children according to the laws of succession. Children born outside of marriage may have to prove that they are descendents of the person who has passed away if there is no mention of them in a will.
Finally, this information should be kept in mind when your biological children are someone else’s stepchildren. Should you get remarried and then pass away, your estate goes directly to your spouse, not your children. When he or she passes, everything goes to his or her biological children. If you haven’t worked with a will lawyer in Atlanta to prepare for this, your children’s inheritance would legally go to their stepsiblings.
Blended families are common, but the laws of succession are often misunderstood. If you are a stepparent or your children have a stepparent, it is a good idea to talk to an Atlanta will lawyer to make sure everyone’s interests are considered.
There are a lot of reasons to consider setting up trusts for your children, but trust and estates lawyers in Atlanta see far too many cases where this just isn’t done. One of the biggest reasons for not setting up a trust could be that you just don’t think you have enough assets to warrant one. We hear about “trust fund babies” and automatically think of the super wealthy, not regular folks like ourselves.
Really, though, even those in the middle class should be thinking about setting up trusts for their children. Even if you don’t have a lot of extra money lying around, you have other assets that can quickly add up in value. Add to that the payout from a life insurance policy, and you suddenly realize that you have quite a bit of financial worth that might be left behind to children who are not ready to handle it. Anything more than about $100,000 is reasonable to consider putting into a trust for children here in Atlanta
What Does the Trust Do?
When you set up a trust with your trust and estates lawyer in Atlanta, you will discover that there are many different ways to use this tool. One of the most important benefits of a trust is that it allows you to stipulate how your children will use the money you leave behind. If your intention is for your kids to use the money for college, but they want to use it to buy a sports car instead, what’s to stop them?
In your case, the trust is what can stop them. You can implement restrictions on how the money is spent. You can, for example, determine that the funds in the trust are designated for specific functions, such as paying for education or day-to-day expenses. In some cases, there is a designated adult to help keep things on track, although this person must be chosen wisely. In other cases, the parent sets age limits on the trust, assuring that the children don’t have access to the money until they have more time to mature.
Protecting the Trust
Another reason to consider a trust is to protect your children’s money from misuse by the adult in charge of the funds. In the case of a “custodial” account, the person in charge can have a lot more say in how the money is spent. This could translate into frivolous expenses, including paying himself or herself an unrealistic amount to “manage” the funds. With a trust, however, the person in charge (the “trustee”) is held more accountable and is required to follow your wishes.
If the trustee does manage the funds poorly, it is also possible that your child would have some legal recourse, as the trust is a legal contract.
Talk to an Atlanta Trust and Estates Lawyer
The best way to determine if a trust is right for you and family is to talk to an Atlanta trust and estates lawyer. Our attorneys are available to sit down with you at no-charge to review your estate plan and consider how a trust or other estate planning tools can best meet your needs. To schedule a complimentary Georgia Family Treasures Planning Session, simply call 770.425.6060 and mention this article.