Estate Planning for Maturing Families

In our last installment, we explored estate planning for young families. This article moves to the next stage, planning for maturing families, where children are in their later teenage years or newly independent adults. At this stage, estate planning presents unique challenges as the focus shifts to balancing spousal support with planning for the children’s future.

For maturing families, often those approaching middle age, the exclusive focus on the needs of the children begins to shift back toward ensuring the long-term well-being of the spouses as well as the needs of the children. As assets grow and the expenses of raising the children begin to decrease, mortgages are paid down, tuition obligations have been accounted for, and debts become more predictable and manageable. A couple’s largest assets are typically their home, retirement accounts, and investment accounts. While planning for the children remains important, estate plans should once again focus on spousal needs, particularly as health concerns may arise that could impact the family’s financial stability.

Leaving assets directly to a minor can create complications. As mentioned in the last installment, certain assets, such as vehicles or family heirlooms, are impractical to leave to minors and would instead pass to a guardian. As a result, choosing an appropriate guardian remains a critical consideration. When planning for the children, a Trust provides a vehicle for long-term management and oversight, helping protect a child’s interests as they mature financially and develop responsible spending habits. It is equally important, however, to revisit the plans that would be in place should one spouse pass away. The surviving spouse must be able to access resources not only to support the children but also to meet their own living needs. The loss of a spouse can place tremendous pressure on the survivor to balance employment obligations with raising a family. A typical estate plan for a young maturing family often includes:

• Wills, often with mirror provisions, naming guardians in the event of a common accident, designating specific bequests, and directing remaining assets to a Trust for the benefit of the children. Each spouse typically serves as executor, with at least one alternate named in case the chosen executor is unable to serve.
  
• Trusts, which allow the surviving spouse unrestricted access to trust assets for any purpose. The surviving spouse could add or withdraw funds and direct how assets should be distributed upon their death. The ability to direct where assets pass at the second death is important because the needs of the children may change substantially after the death of the first spouse. When both spouses have died, the Trust may provide that the trustee continues to provide for each child’s health, education, support and maintenance, with staggered outright distributions, such as one-third at age 25, one-half half at age 30, and the balance at age 35. Spreading out the outright distributions gives each child a chance to learn, so that if the first distribution gets wasted, at least the whole inheritance has not been lost. Having an appropriate alternate trustee, whether an individual or a corporate trustee such as a bank, is an important consideration given the Trust’s long-term role.
• Durable Financial Powers of Attorney, allowing one spouse to handle financial, banking, and tax matters if the other becomes ill, incapacitated, or unavailable. Naming alternates remains important as the responsibility to oversee non-Trust assets cannot be minimized.
  
• Health Care Directives, including Living Wills, Health Care Powers of Attorney, and HIPAA Authorizations remain important. For maturing families, consideration should be given to determining if and when adult children are prepared to serve in decision-making roles.

Establishing an estate plan early helps protect against the unexpected death or incapacity of one or both spouses. While each spouse is alive and capable, estate planning documents can and should be updated as family circumstances change. As the needs and resources of the spouses change over time and the children grow and mature, revisiting trust provisions remains important. The goal is to have a plan and modify it over time to address new needs and changing circumstances.

If you would like to schedule a consultation to discuss your estate planning needs, our Estate Planning team is here to help.