Estate Planning for Young Families - What Parents With Young Children Should Know
With the busyness of life, it is easy for young families to put off estate planning. Many young families forgo estate planning by saying they are too young and do not need it or they cannot afford it. However, tragedy can strike at any time and it is important for those you leave behind to be properly cared for. It is sad to think about the possibility of death at such a young age, but it is prudent and advantageous to plan for the possibility of death and also reflects how much you care for your family.
A good estate plan includes naming a guardian to care for minor children, naming someone to administer the estate, naming someone to manage the inheritance of the minor children, providing instructions for the distribution of your assets, and reviewing your insurance needs and planning for disability.
Naming a Guardian for Minor Children
Naming a guardian for your children will only activate when something happens to both parents. This is often a difficult question for parents, but it is very important. If a guardian is not named, the court will appoint a guardian without knowing the wishes of the parents, children, or other family members.
Naming Someone to Administer the Estate
Often referred to as the executor or trustee, this person will be responsible for handling the financial affairs of the estate including locating and valuing assets, locating and paying bills, distributing assets, hiring an attorney, etc. It is important to find someone that is trustworthy, willing, capable and knowledgeable about you and your wishes.
Naming Someone to Manage the Inheritance of Your Children
Unless you specifically include this in your estate plan, the court will appoint someone to oversee your children’s inheritance. The court usually appoints a friend of the judge and a stranger to the family. The person charged by the court to look over the inheritance will be compensated by a share of the inheritance. Additionally, the inheritance will be divided into equal shares. Many families like to keep the inheritance together in order to care for the different needs of the children. Creating an estate plan will allow you to accomplish these goals by appointing a trusted person of the family to look over the inheritance.
Providing Instructions for the Distribution of Your Assets
Most married couples choose to give their assets to the surviving spouse. In the event that something happens to both of the parents, couples choose to distribute their assets to provide for the care of their children. Many assets will automatically transfer to the surviving spouse depending on how title is held, but an estate plan is still needed for the remaining assets or so the assets can be used to the benefit of the children.
Reviewing Insurance Needs
Part of the estate planning process is to review the life insurance plans of both spouses. Loss of income from one or both of the parents would need to be replaced. Additionally, at least one person would be needed to take over the stay-at-home parent’s responsibilities. Increasing your life insurance coverage may be needed to fulfill these needs, especially if your children want to attend college.
Planning for Disability
There is also the possibility that one or both of the parents could become disabled. An estate plan can cover this unfortunate event. In the case of this event, both parents need a medical power of attorney to make certain medical decisions if both parents are unable to do so. Your spouse will probably be given this responsibility, but it is important to appoint a couple back-ups just in case something happens to both parents. At this stage in the estate planning process, it is important to discuss disability income insurance because life insurance would not cover a disability.
Putting the Plan in Place
Estate planning will require tough decisions about sensitive family topics. However, an experienced estate planning attorney will guide you through your decisions and make the process as simple as possible. If financing the estate plan is an issue, you can start with the important legal documents and expand your estate plan once you feel more comfortable. It is important not to delay your estate plan, thus leaving the door open for the possibility of leaving behind a complicated mess for your loved ones. Once the plan is in place, you can put your mind at peace knowing that if anything happens to you or your spouse, your family will be taken care of. For more information regarding estate planning, check out our blog.