Estate Planning For Families With Young Children
Estate Planning for Families With Young Children
Many families with young children put off estate planning. If asked, they may say they are too busy, can’t afford it or the time isn’t right. As the parent of young children I understand that what elementary school to send your children to, deciding between ballet and gymnastics and getting sometime in for yourself can be difficult. But one thing needs to be a priority and that is getting an estate plan together. I understand most people have trouble just thinking about what would happen if they should pass away while their minor children and spouse are dependent on them. In a city like Washington, DC I meet with busy professionals everyday who think it can’t happen to them. But even a healthy, young professional can be taken unexpectantly by an accident or illness, and those with young families need estate planning precisely because their loved ones are depending on them for the stability they enjoy.
Of course, no one is expecting you to pass away while your children are young, but planning for that possibility is being prudent and responsible, and it shows your family how much you care. In a city where 1 in 10 people have a law degree it never ceases to amaze me how many people are ingnorant of the danger of passing away without a proper estate plan in place.
A solid estate plan for a families with young children will include at a minimum naming someone to oversee the administration of the estate (typically a personal representative or executor) the naming a guardian for minor children, providing instructions for the distribution of your assets either through a will or a revocable trust, and naming someone to manage the inheritance for minor children until they become adults (typically a trustee). Proper estate planning will also include reviewing your life insurance and planning for disability.
Naming an Executor or Personal Representative for Your Estate
Your executor or personal representative will be responsible for filing your will with the District of Columbia Probate Court and managing the probate process.
In addition, the person or persons you select as executor of your estate will be responsible for handling your final financial affairs—locating and valuing assets, locating and paying bills, distributing assets, hiring a probate attorney and other professionals to assist in the administration of your probate estate—so who ever your select should be someone who is trustworthy, willing, able, knows you and will carry out your wishes.
Naming a Guardian for Minor Children
If you have minor children, perhaps the most important component of your estate plan has nothing to do with your assets. Rather it involves the decisions regarding who will care for your minor children if you cannot, commonly know as “NOMINATION OF GUARDIAN FOR MINOR CHILDREN”.
If one parent passes away, the other parent will continue to raise the children (unless he or she is physically or emotionally unable to do so). But who raises your children if bothyou and your spouse pass away? This is often a difficult decision for parents, but it is very important because if you have not named a guardian, the court will have to appoint someone without knowing your wishes, your children or your family members. I have found the following the best advice I can give. Make a list of people whose values, morals and judgment are most congruent with yours. Once you have that list, select someone on the list who is financially able to be a guardian to your children. The combination of morals, values and judgment AND financially stability are critical to selecting an effective guardian for your minor children. Once you have done this, consult with a trusted attorney to have a will prepared which provides for the nomination of guardian for your minor child.
Providing Instructions for Distribution of Your Assets
A living revocable trust is a trust created during the lifetime of the grantor. Under this instrument, the grantor acts as the trustee during their lifetime and retains complete control over the corpus of the trust. While the grantor is alive and has capacity, they have the authority to revoke the trust, change the terms of the trust, remove property from the trust, and add property to the trust.
Most married couples want their assets to go to the surviving spouse if one of them dies. If both parents pass away and the children are young, most people want their assets to be held in trust for the benefit of their children.These monies should be used to provide for their childrens health, welfare, education, maintenance and support while their children are minor and then provide some inheritance to their children when they reach adulthoold. While, some assets may transfer automatically to the surviving spouse by beneficiary designations and how title is held, an estate plan is still needed to control distributions in the event this spouse becomes disabled or dies, so that the assets can be used to provide for the children. This is where a revocable trust can be a valuable tool for controlling the distribution of your estate.
Naming Someone to Manage Your Children’s Inheritance
Selecting a trustee is no small matter or easy choice. Unless you include this in your estate planning, the court will appoint someone to oversee your children’s inheritance. This will likely be a friend of the judge and a stranger to your family. It will cost money, which will be paid from the inheritance. A trustee is the person or Trust Company that the Grantor (the person who set up the trust), appoints in the trust agreement to hold legal title to property for the benefit of another person, commonly called the beneficiary. The trustee is required, according to the terms of the trust agreement to administer the assets of trust according to its terms. A Trustee has an assumed a legal duty (also called a fiduciary duty) to act in the best interests of the beneficiaries of the trust and to preserve the assets of the trust and not commit waste.
Also, the children will receive their inheritance (in equal shares) when they reach legal age, usually age 18. Most parents prefer that their children inherit when they are older and to keep the money in one “ family pot” so it can be used to care for the children’s different needs. Establishing a trust for your children’s inheritance lets you accomplish these goals and select someone you know and trust to manage it. (See Selecting A Trustee)
Reviewing Your Insurance Needs
Part of proper estate planning is to review the amount of life insurance on both parents. Income earned by one or both parents would need to be replaced; also, one or more people would probably be needed to take over the responsibilities of a stay-at-home parent. Additional coverage may be needed to provide for your children until they are grown; even more if you want to pay for college.
Planning for Disability
There is the possibility that one or both parents could become disabled due to injury, illness or even a random act of violence. This should be planned for, as well. Both parents need medical powers of attorney that give someone else legal authority to make health care decisions for you if you are unable to do so. You would probably name your spouse to do this, but one or two others should be named in case your spouse is also unable to act. HIPPA authorizations will give your doctors permission to discuss your medical situation with others (parents, siblings and close friends). Disability income insurance should also be considered because life insurance does not pay at disability.
Putting Your Plan in Place
Estate planning will require you to think about family relationships and some decisions may be difficult. But an experienced estate planning attorney will be able to help you through the process, provide valuable guidance and make sure your plan will do what you want when it is needed. If finances are tight, as they usually are for young families, start with the most essential legal documents and term life insurance, then update and upgrade your plan as your financial situation improves. The most important thing is to not put this off. Once your plan is in place, you will have peace of mind that your family will be protected if something should happen to you.
If you need assistance with estate planning in Washington DC, contact Antonoplos & Associates at 202-803-5676 to schedule a consultation. Let one of our skilled estate planning attorneys help you with all your estate planning needs.