Episode 52: Planning for Your Little One: Estate Planning for September Births

Planning for Your Little One: Estate Planning for September Births

Hello, it’s Peter Klenk, Klenk Law, here to continue our ongoing conversation about death and taxes and estate planning, all these fun things. I’ve got my coffee cup. Hope you’ve got yours. So let’s talk.

And now we’re talking about some fun things. Actually, not the usual depressing things maybe I talk about mostly, but let’s talk about babies.

Babies. Babies are a lot of fun. Babies are cute. They smell wonderful, and they bring on a whole bunch of work. You know, that’s the nature of life.

But in my area, when a baby comes, there are certain things that should be done because not only do you have to learn how to put on diapers and how to burp the baby and all these different things, but you’ve got to kind of plan around what happens if something happens to you, right?

What if there’s an emergency? How do we make sure that the baby is taken care of?

And there are some very simple things, guys, that are to be done. We’re calling this planning for your little one, estate planning for a September birth, because September happens to be the month that most babies are born.

I don’t know why. I’m sure there’s a reason. I asked ChatGPT, I guess, but that’s it. So that’s why this theme’s coming up.

So if you happen to be having a baby soon in September, great. If it’s some other month, this all still applies, right? It doesn’t matter what month the baby comes.

So first, planning.

Let’s start with just the quick thing. You now have this baby. This is a great, great thing.

But somebody needs to be able to step in and take care of your baby in case something happens to you. You might get sick. You might die. Things happen.

So how do we address that?

Well, those are two things, two different things, right?

Picking a guardian for your child to raise your child is a big choice. You have a certain philosophy about how you want your child raised. Not everybody has a personality to raise a child, even though they might have the same values that you do.

And it costs a lot of money.

So this is a little crossover to a trust and setting up the trust and having the money for your child. We’ll talk about that a little bit.

But the guardian’s that person who might be in charge of that. It might just be working with the person, but they have to be a good fit for what you think about your child being raised.

Now, in your will or your revocable trust, you pick somebody to take over if you die.

But there’s also a temporary guardianship, and people often skip this. A lot of planners don’t even have it.

Because look, there’s a much better chance that maybe you’re going to be in an accident or have some sort of issue that’s going to affect you so that you can’t take care of your child for a short amount of time, right?

Even in the hospital, you have the baby. Maybe for some reason you’re incapacitated for two days, and a decision needs to be made about medical care.

Now look, if the other parent’s around, that other parent can do it. But if they’re not, for whatever reason, who is legally able to authorize care for your child? Who is legally able to take your kid home from daycare or from school?

This temporary guardianship, in most states, is good for 60 days. You sign it.

It’s one of those documents that you really, really, really have to make sure that the person has scanned in and there’s a PDF on their phone. So if there’s an emergency, they can come and identify themselves.

But what it does, it grants them the ability to take custody and make decisions for your child for that time period, in case you’re not able to.

So you can see the value of that document.

Now, someday when your kid’s older and they have a phone and they understand the situation, you’d also make sure that they have that.

So they know that if there’s a medical emergency and they’re in the ER and you’ve had an accident, or they’re at school and they find out that you can’t come and get them, you’ve had an emergency, they know that on their phone is the piece of paper that can show that Uncle Bob, Aunt Judy, or whoever it is can come and get you, right?

Everybody’s on the same page, and you can imagine the relief that the police or the social worker, the nurses, are going to have when you’ve done your chores, and they don’t have to worry about figuring out who’s supposed to get your kid and take care of your kid.

So that’s something you just tee up. You have it there. You know the odds, everyone may never need it, but obviously it happens.

And that way, you’ve now set things up so that your child is taken care of.

So that’s an important part.

That part is taking care of the physical part of your child.

The other part is the financial part.

If you die, the state might say that your assets go to your kid, but if they’re underage, they can’t sign anything.

And now who decides who’s in charge of your money and assets?

Well, the king, as I like to say, a judge is going to. The government’s going to.

And they do a fine job, but it takes a long time. It’s cumbersome. Family members show up and fight. It’s messy.

It’s better for you to sit down and say, “Look, if something happens, I’ve now picked the person who’s going to physically take care of my child. Who will take care of the money?”

Now, this might be the same person. It might not be. It might be a different person if you like a little check and balance.

One person is asking for some money to take care of your child, and then the other person is the one writing a check, right? There’s nothing wrong with that.

So who is the best person for that, right? What are the rules of this?

Usually what we’re going to set up is a trust, right?

You’re going to grant the power to a person that we’re going to call the trustee, that you trust, to hold assets for the benefit of your child, and they’re going to take care of your kid.

And when we’re doing that, we’ll brainstorm flexibility and what the rules are. It’s a whole other subject.

But also, how long? Because we get to pick when your kid maybe takes over that job.

And your kid’s a baby. How do you know when they’re going to be ready?

But you make a judgment call mostly based on your own personal experiences. And as your kid gets older, you’ll make a decision based on your actual input from your child.

When they’re teenagers and they’re little pains in the butts, you might say 40.

And then they get a little older and they settle down and they’re actually reasonable human beings making reasonable decisions, you might change it to 25 or something, right?

But that way, they can be in charge at a certain point.

And we can go through the details about how to keep that money protected so that your child has their inheritance that they can spend, but nobody can ever take from them, right?

In case they get a divorce or lawsuits. Stuff’s going to happen to your kid. You know it. That’s life.

You can’t shelter them from everything, but we can make sure that they always at least are able to control the money that you leave them.

So those are decisions, right?

Who’s going to take care of your kid? Who’s going to handle their money? When do they get in charge, right? When can they handle this?

These are all important things.

But on the other side, we have to make sure that you’ve also done your chores so that people can step in and take care of you, so you can get back to your kid.

You need to have your own personal medical power of attorney, right?

Your power of attorney that you granted to somebody who’s going to carry out wishes for you if you’re not able to in the hospital, right?

It’s not good for your kid if you haven’t done this. And now we don’t know who’s going to help you, and there’s a lot of drama going on.

Your kid doesn’t need drama if you’re sick. There’ll be enough stress as it is.

So take care of that chore.

And also a financial power of attorney for yourself.

This is the document that says somebody can access your money if you’re alive but not able to handle money, and take care of not only you, but the baby.

Remember, right? The trust that you set up is there if you die.

What if you’re incapacitated? Who’s managing your money, your house, your insurance, all these things, if you’re not able to for yourself, but also for the baby?

The baby needs your things to be in order so that they’re okay, as well as you.

And these people might, again, all be the same people you pick to be guardians and in charge of your child’s money. It might be different people, right? It just might be.

And then if you’re married, if you’re not even married, if the other parent’s around, you guys are making these decisions together.

And they can shift over time because people get old and personalities change. Life things change.

So this is one decision you’re going to make now, but you want to make sure you have a relationship with a Trusts and Estates Attorney that’s going to kind of keep nudging you, like we do.

I’ll toot our horn here. Every six months, we nudge you because the people you pick for a baby maybe aren’t the best persons to step in if you have a teenager.

It’s just a fact. Some people are better with babies or teenagers. It’s a whole different class of human being practically.

So you want to make sure that over time you make these decisions, that you keep them up to date.

And that’s again what we do every six months. We nudge you with an email to remind you that there are these decisions, and then you keep them up to date so that your kid always has the best options.

Your kid’s always going to be taken care of, right? That’s the idea.

So anyway, those are the overviews.

You might have some more specific things given your situation that we’d address when you’re talking to us, but those are the issues that affect almost everybody.

I hope you found that useful.

And if you’re having a baby, congratulations. It’s a lot of work, but it’s well worth it. They’re great little beings, those babies.

And anyway, I look forward to talking to you.

You guys have a great day. And remember to like and subscribe as I do things as they come up. There’s more information, and I’d love you to get a little note so that we can all stay together.

Bye.