Pittsburgh Family Law Services, P.C. Blog

Securing your child's future from birth through estate planning

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Congratulations on growing your family! The last nine months have been filled with ultrasounds, touring hospitals, and stocking up on diapers. Now your little one is finally here, and your sole focus is on giving her everything she needs to thrive.  But in the midst of finding daycares and checking off all of the milestones, it’s important that you remember the importance of estate planning.  

Many new parents avoid estate planning entirely when their baby is born because it doesn’t seem necessary.  You may not have a lot of assets, or you may think that it simply isn’t necessary because Pennsylvania has rules set up for when someone passes without a Will.  It’s true that Pennsylvania law has remedies for just about every scenario you can think of. But the “one size fits most” approach may not work for your family.  It certainly doesn’t make decisions easier!  

Let’s look at a very common situation.  Jenny has a baby girl named Lily.  She and Jenny’s father Jeff are very amicable, but they know they’ll never get married.  Over the next 10 years, Jenny’s career takes off and now she owns a house and has a nice 401(k).  She’s always thinking about what to best do for Lily and how to make sure she’s taken care of.  Jenny read that because she’s not married, Lily will receive everything if she passes away.  She also knows that 401(k)s don’t go through probate, they go to the named beneficiary.  So, of course she names Lily as a beneficiary to her 401(k).  She wasn’t given the option to name a guardian of the funds, or maybe she was but she didn’t read that part closely and so never designated anyone.  It wasn’t Jenny’s first thought because she’s young and healthy and she won’t really need a guardian.  She’s so busy with school and soccer practice that she doesn’t even think about what to do with her house.  Unfortunately, Jenny passes away in a sudden accident, and Lily is only 10 years old.  Lily has a wonderful, supportive family and she lives with her father. However, now 10-year-old Lily is entitled to receive funds from her mom’s 401(k) and Pennsylvania intestacy law says she inherits Jenny’s entire estate (which means her house).  

You may be thinking “Well surely Lily won’t get that all at once!  It’ll be put into an UTMA account/her grandparents will hold the funds for her/her father will keep everything safe.”  The answer is that if Jeff tries to obtain the funds, the plan will not release them.  Her father has no paperwork saying that he’s authorized to access these funds.  What he finds out after talking to a lawyer is that he has to go to court and ask for a judge to grant permission for someone to act as a guardian.  Jeff also learns that parents are not permitted to serve as the sole guardian.  In addition to trying to help Lily cope with her mother’s death, he now has to hire and pay for a lawyer to identify what benefits Lily is entitled to receive, draft a petition, present that petition in front of a judge, and work with the retirement plan or the bank account to actually get the funds and open an account to hold the funds.  

This scenario doesn’t even begin to contemplate the many complications that could happen.  Pennsylvania of course provides ways to address all of them, and skilled attorneys will help you access those remedies.  But like many things in life, “prevention is better than the cure.”  Much of the headaches that came after Jenny’s passing could have been avoided had she created a Will designating a guardian or spoke with an attorney about how to make sure Lily would be protected.  

In actuality, an attorney would have discussed multiple options with Jenny depending on her goals and her assets.  Unlike Pennsylvania’s default procedure, estate planning is not “one size fits all,” and an attorney will help you identify the best plan for you.  As you begin adjusting to parenthood, remember to take the time to contact a local estate planning attorney to help you determine the best way to protect your children.