Delivering News and Updates on Wills, Trusts, and Estate Administration Matters
In this edition, understand how Social Security can benefit your young children, learn about the insurance limits that apply to your bank accounts, see how your John Hancock can be useful to us, and discover where Amy is popping up next.

Happy back-to-school month! 🍎
One of the biggest struggles parents have to deal with in estate planning is how to provide properly for their young children. When planning for the future, it is important for parents not only to name a guardian who can take in the minor child but also to consider what financial resources will be available to help care for that child. Parents too often feel caught between the desire to safeguard assets until their child is older and the urge to grant unfettered access to funds so that the child lacks for nothing. Fortunately, though, this is one situation where both desires may be achievable if the parents have a strong work history thanks to Social Security.

When we think of “Social Security,” we tend to think of retirement benefits paid out at a certain age or disability benefits received by those unable to work. For younger adults, the only thing they know about Social Security is that it shows up as a deduction taken from their paycheck. For parents, however, it is important to understand that Social Security also provides survivor benefits to your child. Here are the basic facts you need to know:

  • In order for your child to be eligible for survivor benefits, you—the parent—must have worked for at least 18 months in the three years prior to your death (though, the longer you work and the higher your wages, the larger the benefit payable to your child).
  • Child survivor benefits can be as much as 75% of the deceased parent’s basic Social Security benefit, though there is a cap to how much is paid out to a single family.
  • Benefits are available to children who are under the age of 18 and unmarried.
  • Benefits are available to 18- and 19-year-olds who are still in high school (though the benefits end upon graduation or until two months after turning age 19, whichever comes first).
  • Children who have a disability are eligible for continued benefits even after turning age 18.
  • This is not a needs-based program. In other words, your child qualifies to receive benefits solely because he or she has lost a parent. Your child does not have to demonstrate financial hardship or need to obtain benefits.
  • Child survivor benefits do not pay out automatically. The child’s legal guardian will need to apply for these benefits on your child's behalf. Applying as early as possible is best as Social Security may only pay out benefits based on the application date, not the parent’s death date.

Survivor benefits are not just for children. If only one parent has died, the surviving parent may also be eligible to receive benefits if the surviving parent is caring for a child under the age of 16 or a child who has a disability. And, in this scenario, the surviving parent’s benefit is receivable even if the parents were divorced.

“How Can I Find Out What My Child is Entitled To?”

  1. Sign up for your personal Social Security Administration account at www.ssa.gov/myaccount.
  2. Once you have activated your account, you will be able to access your Statement.
  3. Your Statement will list your annual earnings and the estimated survivor benefits for your child based off of those earnings.
  4. The Statement is released annually, so be sure to check back yearly to see how the benefit amount may change.

Once parents understand the benefits available to family members through Social Security, they will be better positioned to plan for their family’s well-being. For example, a mother who knows the
immediate needs of her child will be met thanks to Social Security survivor benefits can feel at ease
delaying her child’s access to his or her inheritance until later in life. While a father who feels the benefit amount is insufficient can talk with his estate planning attorney on how best to provide financially for his son or daughter in a safe and responsible manner.

If your current estate plan does not factor in child survivor benefits from Social Security or if you need to adjust your plan based on the level of benefits provided, please contact us. We'd be happy to conduct a Plan Audit and work with you to adjust your estate plan as needed.

Note: This article does not address Supplemental Security Income (SSI) benefits or the one-time death benefit of $255. To learn more about the benefits you or your family are eligible for following the death of a loved one, call SSA at 1-800-772-1213.
In 1933, as America was grappling with the Great Depression and recovering from the stock market crash, the Federal Deposit Insurance Corporation (FDIC) was formed to reassure Americans that money deposited in banks across the country was safe. For 90 years, FDIC has operated a “deposit insurance fund” to protect consumer deposits at FDIC-insured banks. FDIC deposit insurance applies to checking accounts, savings accounts, money market accounts, certificates of deposit (CDs), and some types of retirement accounts but does not apply to mutual funds, stocks, bonds, life insurance, crypto assets, or annuities. The importance of FDIC was highlighted earlier this year after the failures of Silicon Valley Bank and Signature Bank. Still, it is critical to understand that there are limits to the coverage provided:

There are two important things to keep in mind with this table:

  1. These limits apply for accounts at the same bank. Thus, if you have three Wells Fargo accounts—a Checking Account with $60,000, Savings with $90,000, and a 12-month CD with $120,000—then you have exceeded the FDIC limits and have $20,000 of uninsured funds. However, if you have those same three accounts but the 12-month CD is at State Employee’s Credit Union instead of Wells Fargo, then 100% of your funds are fully insured.
  2. Accounts that name beneficiaries are insured as revocable trust deposits. So, if your individual savings account lists your child as the Payable on Death beneficiary, then that checking account is insured as a revocable trust account, not a single account.

It is important to note that the coverage rules for trust accounts are changing effective April 1, 2024. The purpose of the change is to eliminate the difference in how revocable trust deposits and irrevocable trust deposits are treated. Under the new rules, the insured amount will be $250,000 per owner, per unique beneficiary, per institution, up to a maximum of five beneficiaries (or $1,250,000).

We have had several clients come through the firm over recent months holding more than $250,000 in cash accounts. For some, the money came in the form of an inheritance from a deceased relative. For others, from a recent sale of real estate. Whatever the case may be, if you are holding significant cash reserves, you need to be mindful of these insurance limits. No one expects a bank to fail until it does. If it happens to your bank, you don’t want to be caught holding the [empty] bag.

To find out how much of your money is protected, use the FDIC’s Electronic Deposit Insurance Estimator (EDIE), available here.

Calling clients, former clients, and other friends of Privette Legacy Planning! Most of you know that two witnesses are required to participate in the signing of traditional estate plan documents. As a small office, we find ourselves in need of a 2nd witness to join the festivities from time to time.

If you are local to the Cary area, have some free time during the workday, and would be willing to serve as a witness, please message us. With most signings, the witnesses are needed for 30 minutes or less.

Thank you for considering helping in this way!
Where is Amy popping up next?

Privette Legacy Planning is one of the sponsors for a RE/MAX United client appreciation event on Friday evening, August 25. This tailgate-style event will feature food, (burgers, bbq, hotdogs) and drinks plus a fun area for the kids (inflatables) and even live music.

Last year, there were over 200 people in attendance, so we are excited for this opportunity to connect with our friends and neighbors and even give away some Privette Legacy Planning swag! RE/MAX United partners with our local Children's Miracle Network hospital affiliate—Duke Children's Hospital—for this event.

Enjoy a couple of photos from last year and wish us well for this year's fun!

It is our prayer that all students, teachers, other school personnel, and parents have a safe and productive school year!

Privette Legacy Planning www.leavealegacync.com