When writing your estate plan, your children need to be at the forefront of your mind. According to Fidelity, when drafting an estate plan, you need to think about their guardianship and how you want to distribute your assets.
Using trusts or your retirement plan can solve estate planning issues.
Trusts allow you to transfer assets to your children how you want. The trust not only reduces estate taxes but allows you to choose when your children receive the assets and how much at any given time they may receive. When using a trust, you assign a trustee to control and make decisions on your behalf and your beneficiaries.
If you have a special needs child, you may need to think about any arrangements he or she may need. For example, some children may need a guardian as adults and others may need to live in a care facility. Others may have independence but need help supplementing their income. Trusts and life insurance policies can ensure children have funds later.
Your child cannot roll your retirement plan into his or her IRA. When someone dies, the beneficiaries take required distributions after death based on age. When you name a child as beneficiary, you can name the child individually or name all of your children. Likewise, you can name your children as contingent beneficiaries. For example, if you want your spouse to be beneficiary, but he or she passes away, the IRA transfers to your children.
You may need to consider minor and adult children when drafting your estate plan. For children, you need to prepare them for a future without you.