| Sargent & Lundy Savings Investment Plan |
| LEAVING ASSETS TO YOUR CHILDREN |
| The following excerpts are from an article in the June
1998 issue of "Money" magazine. The opinions expressed by the
author, Galina Espinoza, may or may not reflect those of the SIP Committee.
Everyone should have a will, but if your heirs are minors, a will may not be enough to ensure the smooth transfer of your assets. That's because the guardian of the children's property, whom you name in the will, must get court approval for expenditures and investments on the children's behalf - even if the guardian is the surviving parent. Relying solely on a will also creates a potential time bomb - namely, that children gain full control of their inheritances when they reach the age of majority, 18 in most states. The solution: You need to create a trust to hold your children's inheritances. Most estate-planning experts recommend a so-called revocable living trust, which costs about $500 to $1,000 in legal fees to establish and is separate from your will. (You still need a will, however, to address other estate-planning concerns, such as naming guardians to raise your children in case they're orphaned.) The way a trust works: For all the mystique that surrounds trusts, they are disarmingly basic. In short, a trust is a legal device that holds property for one or more beneficiaries and lets you specify in writing how and when its assets are to be distributed. With a revocable living trust, you transfer title of your assets to the trust while you're alive but keep total control by naming yourself as trustee. You also name a successor trustee to take over when you die. The advantages: The assets in a revocable living trust avoid probate, the court process of validating a will. That means there are no court records of your bequest, which protects your heirs' privacy. Perhaps more important, a court won't have a say in how the trustee manages or distributes the assets; rather, the trustee administers the trust according to the wishes you set forth in the trust document. For example, you can state the financial goals you want to achieve with your bequest, such as paying for college, and the ages at which you want your children to receive any money that remains in the trust after the goals are achieved. By setting goals and timetables, experts say, you help make sure that your child won't spend his or her bequest recklessly or lean on it so heavily that he or she doesn't lead a productive live. "Without a thorough estate plan, you can unintentionally hurt those whom you most wanted to help," says Santa Monica, Calif. estate-planning lawyer Jeffrey Condon. |
This page updated on 6/8/98