We all know that there's nothing picture perfect about real parenting, but you're doing the best you can and wondering what else you should be doing. You may even be wondering what might happen should you and your spouse both pass away. You might be thinking about creating a will, but not really sure what else you should think about. Below are some important estate planning considerations especially for parents.
1) Last Will and Testament.
A Last Will and Testament is the most basic document of an estate plan. In it you will name an executor to be in charge of managing and distributing your assets once you pass away. You dictate who should receive what and how. Even if you think you don't have a lot, creating a Last Will and Testament is important so that your loved ones have one less thing to worry about while they mourn your passing.
2) Life Insurance.
Life insurance is an easy investment to make to care for your family upon your passing. If you are young and healthy, your monthly payment towards a decent plan won't even be noticeable in your overall spending. Your current employer likely offers some form of life insurance for you, but you may also want to purchase separate life insurance that will be independent of your place of work.
3) Update Your Beneficiaries.
Busy parents often find themselves more forgetful than ever. As a kid waiting to get picked up from after-school or piano lessons I often wondered how my mother could actually forget her own child! But now that I'm older and wiser, there's no judgment here! One thing though that you cannot forget is to update the beneficiaries to your pre-existing retirement benefits and life insurance policies! This is an easy miss for many people. Who knows, you may even have an ex-spouse or significant other still listed as a beneficiary to a small fortune!
4) Naming a Guardian For Your Child(ren).
Ah yes, the million dollar question. Who would take care of your kids should you and your spouse both pass away? Now, before you get into an argument with your spouse about whose parents are less crazy, let's discuss some important things to consider that will assist your decision making.
- Prospective guardian's age. This is a serious consideration to think about. As an experienced family law attorney, I often saw grandparents asked to raise small children. They sometimes couldn't provide the proper attention to the children due to their own health issues or lack of mobility. It was also not unusual to see these grandparent-guardians die before the children turned eighteen, leaving the mourning minors to transition to yet another home.
- How and Where you want your children to be raised. Do you want your children to be raised in a religious household? Do you want your children to be raised in the suburbs or do you prefer a city atmosphere? Are your prospective guardians aligned with these preferences?
- Other family members. If you and your spouse both pass away would you want your children to have close contact to your extended family? Would your prospective guardian be able to facilitate these relationships?
These are just a few considerations on how to name a guardian for your children. You can name your preferred guardians in your will. However, if you do not provide guidance to your loved ones in this area, a terrible legal battle might ensue should your family members disagree on who would be the most appropriate guardians for your child(ren).
5) Creating a Trust for Your Child(ren).
The term "Trust Fund Baby" always makes me think of Dylan McKay from Beverly Hills 90210, played by Luke Perry in the early 1990s. He was a lost young man with millions of dollars to burn from his wealthy yet morally corrupt father. Luckily, Dylan had a responsible Trustee, Mr. Walsh to oversee Dylan's spending and ensure Dylan had all that he needed, but not be able to blow it all away.
A Trust is a legal vehicle you can use to house all of your assets. Within the Trust you can create rules and guidelines for who will be in charge and how, when and to whom your funds will be distributed. Creating a Trust for your child(ren) should you pass away is vitally important. Think about who you were at eighteen years old. Were you fiscally responsible enough to receive a check for $1million? Probably not. Creating a Trust for your child(ren) will provide some safety measures for them as they mature as adults. You can have your own dependable Mr. Walsh appointed to oversee the Trust after you're gone and offer guidelines to how and when your child(ren) will receive their inheritance from the Trust.
These are just a few consideration to think about when working through your estate plan. At DY Law Group, LLC we have a thorough planning process and will work through all of your estate planning concerns no matter how big or small. Schedule an appointment to get started!