Does Your Adult Child Need A Will?
You may have spent part of the pandemic updating your estate plan and getting your financial house in order, but did you ever stop to think about whether your adult child needs a will? Most people don’t think their children need a will until they get married or have a child of their own, but realistically if your son or daughter has any assets in their name, they should have a will.
This became apparent to a client of mine when his young adult son died of a drug overdose. The client had established a bank account for his son and when the son died, probate was required to access the account. To complicate matters, the son did not have a will and he left behind a child born out of wedlock. Needless to say, it was a messy situation and one that could have been avoided with a simple will.
Most of us do not want to think about a will for our children. After all, it requires contemplating your child’s death. Most folks cannot fathom their own immortality, let alone their child’s demise. But death is a fact of life. As Haruki Murakami wrote, “Death is not the opposite of life, but a part of it.”
For most young adults, a simple will and updated beneficiaries on retirement accounts and life insurance policies (usually through an employer) is all that is needed to transfer assets in the event of their passing. The child will need to name someone to receive their assets on their death (usually their siblings or other family members) and they need to name an executor. This is often a parent followed by a sibling.
As long as your child is signing a will, your child should also sign a health care proxy and power of attorney. The health care proxy names someone, usually a family member, to make health care decisions for him in case he cannot make them himself. The power of attorney will allow his named agent access to his financial assets in the event he is incapacitated.
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Many parents have established bank accounts for their children. Grandparents may have also gifted a child financial assets over the years. Even if your child has not received any financial gifts, she may be working and saving monies in her own accounts. These are all circumstances for which a child should have a will.
This will most likely be your child’s first foray into estate planning, but it will not be the last. As his assets grow, his planning will become more complex. In addition, if he has a family, that will change the plan as well. Starting the estate planning process now begins to educate your child on what he should know to properly manage the assets he will inherit from you and eventually leave for his own children. It also introduces her to your team of advisors so that if something happens to you, she has someone to reach out to for assistance.