As a parent, there isn’t anything that you wouldn’t do to safeguard your treasured children. From choosing their first toy to their college, you plan out everything. But have you ever considered Estate planning to ensure your child receives proper care even if you are not around anymore?
Surprisingly, only 33% of Americans have an estate plan. Thinking about your own death can be a hard pill to swallow. Many avoid the subject because it makes them uncomfortable. As unpleasant as it may be, it is necessary to think about estate planning for young parents to safeguard the future of their children.
It is impossible to foresee the future. But, with good estate planning for minor children or a child on the way, you will remain at peace, knowing that your children will be safe if the worst-case scenario were to happen. This article discusses essential estate planning tips for families with children.
What Is Estate Planning?
In our lifetime, each of us comes to possess some estate in the form of a car, house, real estate, bank accounts, life insurance, investments, furniture, valuable documents, digital assets, and many more. Some of them may have significant value, while others are modest. However, we leave them all behind when we pass away.
Having estate planning for our assets helps us to pass them on to our children or close family members after our demise. Planning or Estate entails deciding how to protect, maintain, and distribute a person’s assets after death. Planning for our assets is undoubtedly a difficult task, but it is one that we must act on.
People plan for estates for different reasons, including protecting family wealth or donating inheritance for a charitable cause. Planning for your Estate includes accounting for your assets, creating a last will, appointing an estate lawyer, providing legal guardianship and inheritance for surviving minor children, and more.
One of the biggest misconceptions about planning for an estate is that only older people should have one. Estate planning for parents with children or expecting one is equally crucial. Adequate planning for your Estate while you’re still healthy safeguards your children if the worst happens. Let’s discuss four tips for will planning for parents.
4 Tips For Estate Planning
The need to take care of your children goes beyond the immediate now. Should anything happen to you or your spouse, you would want your children to be carefully taken care of, especially if they are young. Estate planning enables you to put a plan in place so that you have every necessity in place to take care of your children in the case of unforeseen circumstances.
Write A Will
One of the foremost estate planning steps is to write wills and create trusts. The cornerstone of an estate strategy is a last will and testament, as it specifies the disposition of your assets, names an executor, and in some cases, a trustee to manage your assets after your death.
Writing a will for young parents is more about leaving their children in the safe hands of a guardian In case both the parents pass away and are unable to raise their children. In such situations, the designated person takes care of the children.
If you don’t specify who you want to take guardianship of your children in your will, the court makes that decision regardless of your wishes. But it is always better to leave them in capable hands who understand the needs of supporting a child.
Keep in mind that children cannot inherit property directly. The court may appoint a trustee if you don’t mention one in your will who will manage your inheritance until the children are 18 years old. It is preferable to avoid such a situation and appoint a trustee of your choice.
While writing a will, you can take the help of an estate planning lawyer, also known as a probate attorney or probate lawyer. Estate planning attorneys are skilled and qualified legal experts who can help you understand all legal affairs and save you from confusion.
Your family’s requirements will change over time, and you should revise your Will to account for those changes with a revocable living trust. If there are changes in mind about your child’s guardianship or any law comes into question, you will benefit from a revocable trust.
Buy Life Insurance
You have a lifetime to invest in your work and have estate planning for the legacy you wish to leave your children. But what do your children do if you pass away early? Term life insurance can assist in bridging the gap between your existing financial resources and your family’s present and future demands.
Preparing life insurance should be a key component of estate planning for parents. There are various types of life insurance. Before buying life insurance, assess the policy’s ability to pay for foreseeable necessities like your mortgage, funeral costs, daily expenditures, and the education of a growing child.
Remember that your children will only be allowed to use your life insurance policy when they reach the age of 18. If the primary beneficiary is not surviving, the life insurance money may go to a court-appointed guardian. If you create a custodial account, the insurance money remains there until your children are of legal age.
Write Power Of Attorney
If you pass away or become incapacitated, a durable power of attorney for finances provides control over your assets to someone of your choice. This can be beneficial for your kids. Without a DPOA, your surviving partner or children may require a court order to access financial matters.
What would happen if an accident leaves you incapacitated? Or a health issue leaves you unable to manage your finances or the affairs of your family? In such cases, court-appointed custodians handle your assets for both your benefit and the benefit of your children if you don’t have a durable power of attorney.
Assign Beneficiaries
One of the essential estate planning steps for families with children is to assign beneficiary designations for their life insurance, bank accounts, investment accounts, and retirement accounts. When you designate a beneficiary, your money is transferred to the person you specify without going through probate.
Most choose their surviving spouse as the beneficiary of their insurance policies or other financial matters. You can appoint your children as your secondary beneficiaries in case both you and your partner pass away. By placing children second in line after your primary beneficiary, you ensure that your children will inherit your assets, life insurance, and other financial affairs.
Conclusion
Estate planning for parents is crucial. Legal and financial protections for children, especially minors, are necessary because they cannot sustain themselves. If you pass away early, ensure that your children’s necessities in terms of money, health, emotional support, and education are well cared for. You would do anything as a parent to keep your kids safe. With estate planning, you secure the alternative for your children and their future.
In truth, there are various crucial aspects to consider when planning for your Estate that align well with the future care of your children. Everything must be planned carefully, from writing a will to selecting a guardian for your children. You can seek help from a legal advisor, such as an estate planning attorney, to help you with better estate planning.
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