Estate Planning for Young Families: 7 Important Steps to Take
Beginning a family is an exciting time full of memories and milestones. No one wants to consider bad situations while marriages are new and the kids are young. But, unfortunately, sometimes tragedy hits and families are left to pick up the pieces. Planning for the worst is a way for parents to show they care about their family and will continue to do so even if something happens to them.
Estate planning for young families is extremely important to ensure a safe and secure future for children and other dependents. While it may appear to be a confusing process, there are some simple steps you can take to make sure your estate is taken care of properly.
Name an Executor or Trustee
An executor or trustee is the person you designate to handle your financial affairs. This includes locating, valuing, and distributing assets; paying bills; and hiring a lawyer and advisers. You’ll want this to be someone you trust completely. They should know you very well and be completely willing to carry out your wishes.
Pick a Guardian for Your Children
In most situations, the parent left unharmed will continue to care for the children as long as they are physically and mentally capable. But, in the worst situations, bad things happen to both parents and the children will be placed in the care of a guardian.
This guardian should be named by the parents, or else the judge will have to choose a guardian from your family members or close friends. Ideally, you will have a plan made and someone willing to step in as guardian in case of tragedy.
Picking a guardian is a major decision that includes many factors; most importantly, you want the individual to be fully on-board with the possibility of taking on the responsibility of parenting your children. Always ask before naming a guardian! Besides that, consider where the guardian lives; what his or her lifestyle is like; what his or her religious, political, and moral beliefs are; and what his or her financial situation is like. All of these aspects have the potential to influence your children’s lives significantly.
Figure Out How Assets Will Be Distributed
If just one spouse passes, it is common for assets to go to the surviving partner. If both pass away and the children are left, you most likely want all of the assets to go towards caring for the children. Some assets transfer automatically while others are more complicated due to beneficiary designations and title holders; make sure you talk to an estate planner to get all of these straight and ensure your assets would be transferred properly and to your wishes.
Choose Someone to Manage Your Children’s Inheritance
Not choosing a person to manage the inheritance means that, in case of an accident, the inheritance will be placed in the hands of the court to manage. The court will take money out of the inheritance as a fee to manage it, which is unfair to the children who should receive the full amount. It also means the children will receive the money at 18, when many parents would prefer the children be older when they receive it.
Establishing a trust for the inheritance is a great way to avoid these issues. As parents, you can set instructions on who should manage the trust and how the finances in it should be used. Once your children reach a mature enough age, they can take over the trust and their inheritance completely.
Look at Your Life Insurance
Life insurance is a good investment in the event of a tragedy. You want to make sure it covers the income earned by one or both parents, debts, and funeral costs. Other factors that you can choose to incorporate in the plan include money for transition costs, living expenses, and college education for your children.
Consider the Possibility of Disabilities
In some major accidents, you and/or your partner may become disabled. Be prepared for this event by choosing a person who will have power of attorney to make decisions regarding your health if you are unable to do so. Typically this is your spouse, but you and your partner should name others as well in case neither of you are able to act.
Keep It Updated
Your life situation will continue to grow and change throughout the years. Make sure your estate plan doesn’t stay stagnant and out of date through these changes by checking in about once a year and making sure it is still relevant. New children, a divorce, a marriage, a guardian passing away; all of these (and more) have the potential of happening.
Experienced Estate Planning Assistance in Maryland
Estate planning for young families doesn’t have to be difficult or confusing. In fact, it can be rewarding once you know you have a plan laid out to protect your assets and your family! At the Law Offices of David Wingate, we are happy to help set young families up for a solid, secure future. Contact us today!Tags: disability insurance, estate planning, life insurance, naming guardians, trusts, wills