With March Break upon us, parents are likely spending more time with the kids and perhaps thinking more about plans for their future.
You likely already know that you need a will. In fact, you might already have one. But, there are a few things you can do to make smarter decisions when it comes to your estate plan as a parent.
We’ve rounded up the top 5 things we think you should consider when including your kids in your will. (And how you can use our new testamentary trust feature to do so.)
1. Choose a trusted guardian and custodian
Wills are about more than passing along money and assets. One of the most important things you can do in your will as a parent is to name a guardian and custodian for any minor children. No one wants to think about a world where young children are left without parents. But making this decision gives you peace of mind, knowing they’ll be left under the care of someone you trust.
If you don’t choose a guardian in your will, the courts will ultimately make this decision for you – and it might not be someone you would have chosen yourself.
Once you’ve made your decision, the best thing to do is speak to the person (or people) you’ve chosen. Taking on the role of guardian is a huge responsibility, so you want to make sure they’re comfortable with and up for the task. It’s also an opportunity for you to communicate any important information they need to know about your children. This can include anything from health care information to your wishes about their upbringing.
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2. Select age of inheritance
In your will, you can also make decisions about who you’d like to pass your assets to by choosing your beneficiaries. You’ll likely want to include your children as your beneficiaries. But it’s also important to outline the details around how you’d like your children to receive their inheritance, for instance what age they should receive their inheritance..
If no specific wishes are outlined, a minor child will receive their inheritance at the age of majority – typically at 18 or 19 years old.
But if we’re being honest, most of us weren’t great with money at that age. That’s why many parents will often choose a different age for their children to receive their inheritance to ensure the funds are put to good use. Many parents will choose the age of 21 or 25.
However, you can take this a step further without making your children wait for one lump sum by staggering their inheritance payments.
3. Stagger inheritance payments
Rather than in one lump sum, your minor children can receive their inheritance in a few different installments. You can do this through something called a testamentary trust.
A testamentary trust is managed by the trustee (typically your executor) and parts of the inheritance will be held in trust until the age you specify and managed by the trustee (typically your executor). With Willful’s testamentary trust feature, you can set the inheritance to be released in 2-3 payments anywhere between the age of majority and 40 years old.
For example, you can have your children receive the first 20% of their inheritance at 19 years old and the remaining 80% at age 25. This feature gives you better control over how much your children inherit and when.
One thing to keep in mind when using a testamentary trust is that you should choose an executor who is likely to be able to support with distributing the funds over your specified number of years. (For example, if the last payment is when your child reaches 40 years old, your parents may not make the best executors since they may no longer be around when that time comes.)
4. Appoint backups for all your key roles
While you’re making your estate plan today, the hope is that it won’t come into effect for a long time. A lot of things can change within that time.
That’s why as a parent, you should make sure to appoint backups for all the key roles in your will. This includes your executor (trustee), guardians (custodians), and power of attorneys. By selecting backups, you can feel confident knowing that there’s a plan in place if your original choice is unable or no longer willing to take on the role when the time comes.
5. Keep your will up to date
A will isn’t a one-and-done document. As your family evolves over time, one of the smartest things you can do is come back and update your will.
You might not always need to make changes, but by reviewing your documents from time to time, you’ll know that they reflect your current wishes. While you should be reviewing your will every 6 months to a year, here are some key moments where you may want to make updates.
- Moving – whether it’s moving away from people you’ve appointed in your will or purchasing/selling property
- Addition to the family – this includes the birth of a child or any other addition to your family
- New family pet – make sure to add a pet guardian if your family gets a new pet
- Sale or purchase of large assets – this can include property or any other large assets, like a vehicle
If you make your will with Willful, you can easily update your will anytime.
Making your will with Willful
Almost two-thirds (61%) of Canadian parents don’t have an up-to-date will. But it’s one of the best ways to protect your children and prepare for their future. While planning for your own death can feel scary and overwhelming, you’ll enjoy peace of mind knowing you’ve put a plan in place.
Willful has also helped thousands of parents create or update their wills and power of attorney documents. Create your will online from the comfort of your home. Start your will for free here →