Protect Your Children's Future


As a parent, you're always thinking about what's best for your children. But have you thought about what might happen if you're no longer around? It's not a pleasant subject, but it is important. Planning for your children's future is even more important if you're not around to help.

Designating Guardians
Make sure to have a will drafted by an attorney If you haven't already and name one or more individuals to be the legal guardian of any minor child --  typically until the child reaches age 18. A guardian will have to make decisions regarding the care and upbringing of the child. The person(s) named should be consulted before the will is drafted to be sure they are willing to accept the responsibility. Since the designated guardian may become unable to serve, it is also a good idea to name one or two successor guardians. You may name a different person to be responsible for overseeing your children's financial affairs.

Establishing a trust

While a child may be an adult in years, he or she may not be mature enough to handle, invest or manage property. You can establish a trust to protect the property you intend to pass on to children, no matter what their age. Trusts can protect assets for anyone you desire and may continue even until the death of the child and beyond.

One of the most important decisions to make is who will be the trustee. The trustee (individual or professional) will manage the assets and make distributions based on instructions you provide in the trust document.

Paying estate taxes
Under current tax law, the amount subject to estate tax and the percentage to be taxed on the remaining estate will decrease until 2010 when the estate tax is repealed. However, unless current law is extended by Congress, the estate tax is due to be reinstated in 2011. Because the future of the estate tax is uncertain, individuals with assets more than $1 million should consult an attorney, a tax advisor and a financial professional to consider effective estate planning strategies.

In addition to federal estate taxes, some states impose their own estate or inheritance tax. In addition, some forms of property -- traditional IRAs, pensions, deferred compensation survivorship benefits, deferred annuity death benefits -- may be subject to income taxes.

Gifts or bequests to a surviving spouse are generally exempt from federal estate taxes under the unlimited marital deduction. And, the income tax due on IRA and qualified plan distributions payable to a surviving spouse can be deferred by rolling them over to a surviving spouse's IRA.

Income Protection
As a parent, you should consider a financial protection plan that includes Life and Disability Income Insurance, which they can develop with their financial professional. You should determine how much capital or income is necessary to help protect  your children or other beneficiaries. For example, money may be needed to help maintain a home for children, pay for college or other expenses in the event of the bread winner's death or disability. This financial protection plan should be coordinated with a will or trust.

Living Documents
All parents should have an up-to-date power of attorney, health care proxy and living will. A power of attorney basically gives another person the right to pay bills on your behalf and otherwise manage your finances according to the terms of the document, which is typically drawn up by a qualified estate planning attorney. The subsequent documents give you the opportunity to express your desires concerning the use of life support and other treatments to keep you alive, and permit medical decisions to be made for you if you are unable to do so. Often, married couples rely on each other to make these types of decisions.

Although it is a difficult subject to face, you have options when it comes to protecting your estate and your family. The steps you take now can help prevent the wrong people from making decisions for your loved ones.

AXA Advisors, LLC does not provide legal or tax advice. Please consult your tax or legal advisor regarding your individual situation.

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