We’ve all heard stories about kids losing their parents and finding out they weren’t in the will. But one lawyer says this is actually the preferred choice — provided you take alternate steps, of course.
The lawyer explained why parents should leave nothing to their children in their will, and what they should do instead.
It sounds harsh, but we’re not actually talking about disinheriting your kids, leaving everything to your dog, or using your will to make some kind of pointed statement like those high-profile estate debacles we’ve all heard about.
Rather, money protection attorney Brittany Cohen explained that will not actually be the best way to protect and allocate assets to those left behind.
In a TikTok, Cohen explained why parents should leave nothing to their kids in their will, other common money moves that are big no-nos, and what parents should do instead. Hint: It’s things we all tend to assume are just for rich people, but definitely aren’t!
1. Never leave anything to your children at will.
That means cutting them out of the will, yes — but not in the way you’d assume.
“Instead, I would leave everything to a trust where my kids are named as the beneficiaries on that trust,” Cohen explained.
A trust is a legal arrangement that spells out how assets can be used during a person’s lifetime, as well as to whom, and how, they should be passed on after a person’s death.
Photo: fizkes / Shutterstock
We typically think of these as strictly the province of the very rich — many of us have known a “trust-fund baby” in our day — but they’re actually just simple legal arrangements applicable to even minimal assets, like a car and house . And unlike wills, they protect your assets from many forms of taxation, family members contesting the will, and other common estate problems like the probate court system (more on that mess later).
Simply put: If you want to be sure your assets go where you want them to go with minimal mucking around, put your stuff in a trust, not just in your will. And that goes for more than just things like your money and your house, Cohen says.
2. Never make minor children beneficiaries of your life insurance.
Here again, a trust is the way to go.
“Instead I would set up a living trust and designate my trust as the beneficiary of my life insurance accounts,” Cohen said, “and then name my minor children as the beneficiaries of my living trust.”
A revocable living trust is a specific type of trust that covers how your assets are to be handled while you’re still alive, if you become incapacitated, and if you die. The word “revocable” means they can be changed any time until your death.
Placing life insurance in a trust Rather than simply naming your kids as beneficiaries will protect your life insurance payments from many forms of taxation.
3. Never put your kids’ names on your home to avoid Medicaid recovery.
Many don’t know this, but state governments are permitted to seize assets from your estate after your death pay off any Medicaid benefits you received after the age of 55, or at any time in their lives for people who were permanently institutionalized. This often includes placing liens on the value of your house, and your heirs will not receive anything from your estate until the Medicaid “debt” has been paid off in full.
People will sometimes place their homes in their children’s names to avoid this liability, but attorneys say this is a bad idea. For one, it can create a huge tax burden, and it can also make you ineligible for Medicaid services while you’re still alive.
So what’s the solution?
“I would put my home in a Medicaid asset protection trust and name my children as the beneficiaries of that trust,” Cohen said. A Medicaid asset trust is a specific type of trust designed for these situations and can include things like vehicles, jewelry, and some types of investments too.
4. Never add children’s names to bank accounts.
“Instead, I would set up a revocable living trust and put my bank account in that revocable living trust and name my children as the beneficiaries of that revocable living trust,” Cohen advised.
Like other types of trusts, this avoids the costly and taxing — both figuratively and literally — process of your bank accounts being handled by the probate system instead of the people you intended.
5. Never add your children’s names to the deed of your primary residence.
Similar to items three and four, people often do this thinking it will avoid their home ending up in the probate system.
Unfortunately, it doesn’t work that way, and here again, Cohen recommends the revocable living trust to ensure your house goes to the people you want it to go to, without any runaround like the dreaded probate system.
This leads us to Cohen’s sixth point — the one that underpins all of his advice.
6. Never make your kids go through probate court.
This means doing the leg work of taking care of your estate before you pass, of course, but doing it the right way with trusts, which Cohen explains, “avoids probate court so they don’t have to spend unnecessary time, energy and money going to court to own the assets that [you] want them to inherit.”
Ask anyone who’s had to deal with it, the probate system is often a nightmare, even if you have the will. In probate, the court system in your state will evaluate the value of your assets, pay any debts you owe, and then decide how to allocate what’s left in a process that can sometimes take years and often violates the deceased’s wishes.
Sure, trusts are often the province of the privileged rich kids the rest of us tend to resent! And for those of us who aren’t wealthy, we tend to think of anything requiring a lawyer’s assistance as daunting and out of reach.
But setting up a trust with a lawyer costs usually between $1,500 and $2,500 — a small price to pay to make sure your loved ones are taken care of the way you choose, rather than the way the courts and state governments prefer. As Cohen puts it, “Trusts are for the middle class too!”
John Sundholm is a news and entertainment writer who covers pop culture, social justice and human interest topics.