Advisor Spotlight: Kylie Fletcher
/Ms. Fletcher is the Founder and Principal Attorney at Fletcher Law in San Diego. She serves clients throughout California in the area of Estate Planning. I recently had Kylie answer some frequently asked questions.
Linda Rogers: What is the biggest mistake that families with young children make with regards to their Estate Planning?
Kylie Fletcher: Often, young parents avoid estate planning because they believe that they are young and healthy and need not be concerned yet. Sometimes, they feel they can’t afford an attorney. However, estate planning is a vital part of caring for your young child. Doing nothing can be a very serious and costly mistake. The most important part of an estate plan for young parents is naming a guardian for their children. The guardian is the person who will care for the children who have not reached the age of majority before both parents die. Select someone you trust to raise your children and determine if that person is agreeable before finalizing your will. When selecting a guardian, consider the age of the person and whether they will be able to provide adequate care. Name a secondary guardian in the event that the primary guardian is unable or unwilling to serve.
Linda Rogers: For children under 18, do you recommend a Trust be listed as the contingent beneficiary (assuming the primary beneficiary is the spouse) as opposed to the children themselves?
Kylie Fletcher: Yes. If the child is still a minor when the parent dies, the court will usually get involved, especially if the inheritance is significant. Minor children can be on a title, but they cannot conduct business in their own names. When the owner’s signature is required to make a sale, refinance or transact other business, the court will have to get involved to protect the child’s interests. When the court is involved things move slowly and can become very expensive. Every expense must be documented, audited and approved by the court and an Attorney will need to represent the child.
If you establish a Trust as the contingent beneficiary, a person you select, not the court, will be able to manage the inheritance for your minor children until they reach the age(s) that you determine. A Trust can accommodate each child’s needs and circumstances and protect your children’s inheritance from the courts, irresponsible spending and creditors (even divorce proceedings).
Linda Rogers: Can you give us examples of plans that you have seen parents use to stipulate how children will receive an inheritance upon their passing?
Kylie Fletcher: Often parents worry about leaving money to their children. They want their children to have enough to do whatever they wish, but not so much that they will be lazy and unproductive. Therefore, parents who create estate plans usually create a Trust to hold assets for their children. Below are two very common planning options:
Option #1: Lump Sum
Parents will create a Trust to hold assets for children until they reach a certain age. Once the child reaches a designated age (usually 25, 30 or 35 years old) he or she will receive a lump sum payment.
Option #2: Installments
Many parents like to give their children more than one opportunity to invest or use the inheritance wisely, which doesn’t always happen the first time around. Installments can be made at certain intervals (say, one-third upon your death, one-third five years later, and the final third five years after that) or at certain ages (say, age 25, age 30 and age 35).
To learn more, Fletcher Law is hosting a Special Needs and General Needs Seminar on Sunday, November 10th from 9:30am to 11:00am at Pump It Up in Sorrento Valley. Child Care will be provided. Contact Kylie if you are interested in attending.
Linda Rogers, CFP®, EA, MSBA is the owner and founder of Planning Within Reach, LLC (PWR). Originally from New Jersey, Linda services clients throughout San Diego county and nationwide. She leads the design of PWR's investment portfolios which utilize broad, low-cost investments that integrate environmentally, socially, and governance (ESG) factors.
Planning Within Reach, LLC (PWR) is a fee-only and fiduciary wealth management firm offering one-time comprehensive financial planning, ongoing impact-focused investment management and tax preparation services in San Diego and nationwide. PWR is a woman-owned firm that specializes in busy professionals and impact investors. Planning Within Reach, LLC and their advisors do not receive commissions and do not hold any insurance licenses or brokerage relationships.