Getting started: Estate Planning for young families

Getting started: Estate Planning for young families

In the euphoria and exhaustion of catering to young children, estate planning may probably not be at the apogee of your priority list.  However, all families, particularly those with young children, should have a basic estate plan in place. If something bad were to happen, your family would be grateful that you made the decisions to plan your estate.

Here are a few things to keep in mind as you create an estate plan for your family.

  • Select an executor or trustee for your estate

You will want to select an individual who will carry out the mechanics of winding down your estate. This individual, also regarded as an executor or trustee, will help share the property based on you will, close down your bank accounts, pay down debts, sell properties if required, etc. If you fail to appoint this individual, the courts will make the decision for you.

  • Select the right beneficiaries

Beneficiaries on life insurance including retirement accounts such as 401(k) s and IRAs take precedence over what is stated in a will. Thus, if you would like your assets to be given to your spouse or you children, you will want to ensure that your name the right beneficiaries.

Know that you shouldn’t list your minor children directly as contingent beneficiaries as they aren’t mature enough to own property directly until they become adults. You will want to name the trust that will hold the assets for them until they are mature.

  • Select guardians for your children

As a parent of a young child or children, the main reason why you need an estate plan, especially a will, is to name who will cater to your child or children if both you and the other parent die. If you fail to, the court will choose a guardian. This individual is usually a family member (or other responsible friend). Instead of leaving it to the courts to decide among family members, make the choice yourself by creating an estate plan. 

If you are a single parent, it is even more crucial to have these decisions made as soon as possible and documented in a will.

Many parents disagree about who they would like to cater to their child or children. Maybe one parent thinks a grandparent would be ideal and the other parent predicts that your children would run the household. Or you might think of a perfect individual, but he or she isn’t ready for the task at hand. It is best to figure all of that out now than to leave such an essential decision up to a total stranger.

As soon as you narrow down the choices, ensure you ask the potential guardian if he or she would be willing to handle the responsibility. You want this individual to be willing to cater to your children.

  • Consider who will manage your children’s finances

When designating a guardian for your children, you will also want to consider who will handle the money and property for the children until they become mature enough to handle their affairs. This individual can be the same individual as the guardian. However, it doesn’t have to be. If your sister is good with your children, but isn’t a good money manager, that is okay. You can chose her as the guardian and select someone else as the trustee of your children’s money. Again, if you fail to choose a financial trustee, the courts will select an individual on your behalf.

You might also want to think of establishing a trust to manage your children’s inheritance more effectively. This can lessen costs when settling an estate. In addition, it is easier to specify exactly how you would like your assets to be shared for your children.

Do you need the help of an estate planning attorney to plan your estate? Or do you need the help of a professional to update your already made estate plan? Don’t hesitate to contact our office.

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