Estate planning is important for young families to consider so that parents can ensure their minor children are well cared for and provided for in the parents’ absence. A parents’ absence can result from incapacity or death, but we as humans tend to think we are invincible, so we fail to plan until it is too late. When we have minor children, we need to make sure we are not making this mistake ourselves!
Key indicators that are important when discussing and implementing an estate plan include: owning property, having life insurance, having minor children.
The key questions for young families to discuss when considering estate planning are:
- Who would care for any minor children in the parent(s) absence?
- What resources would be available to assist those who will care for minor children, and how do you ensure the protection of those resources?
- How many or Who would assist with healthcare and financial decision making for parents if they are still living but become unable to manage such things themselves?
- What goals do you have for your children’s future, what financial resources do you have, and how can we best plan for and use those resources to provide for your children and assist them in meeting those goals if the parents are no longer able to do so?
While estate planning is often thought of as a subject that needs only be considered by older individuals or those who have accumulated significant wealth, many estate planning pieces apply to younger families. Parents of minor children, we would be remiss not to consider.
The key pieces that should be considered by young families when estate planning may include a combination of some, or all, of the following documents: Healthcare Power of Attorney, Financial Power of Attorney, Guardianship Designation, Last Will and Testament, and Revocable Living Trust.
As most parents would tell you, their children are the most important thing in their world. As a result, should something happen to parents while their children are minors? Causing a situation where the parents are no longer able to care for their children, it is important to consider things such as:
Who would care for the minor children?
Parents should designate a Guardian to raise and care for their children in the parents’ absence. It is always a good idea to name an alternate Guardian as well, in the event the first person or couple named is unable or unwilling to act. When naming a guardian, important considerations include things such as; who would be able to take care of the child(ren) with as little disruption as possible. The older children are, the more important this becomes. This includes maintaining the child in the same school district, extra-curricular activities, and allowing them to continue to be near their friends or close family members. Other considerations include how the Guardians raise their own children if they have them, religious beliefs, cultural beliefs and traditions, and overall morals and values.
If the Guardians being named do not reside near the children, it may also be important to name a temporary Guardian who could take custody of any minor children temporarily until the permanent Guardian can make arrangements to travel to the children.
What would happen to your house and other assets if you pass away and have minor children?
Parents should consider whether they would want the named Guardians to have the option of continuing to reside in the family home with the children. Practically speaking, this decision must also include considerations such as whether or not the property has a mortgage. Whether the named Guardians have their own property. And children, or whether the named Guardians reside in the same area or would be willing to relocate.
How do you protect property and financial assets for the benefit of minor children?
At the minimum, parents should consider executing a last will. Indicate how property will be maintained, distributed, or sold upon their passing. However, often, placing real estate into a trust would benefit the parents.l. In turn, this would benefit the children upon the passing of the parents. This is the best way to accomplish flexibility regarding the property. While also protecting any equity in the property for the benefit of the children.
As the lawyers at McCarthy Law, LLC, can explain, a common mistake parents make is assuming a will is enough to provide for their children. However, that is often not the case. And a will often time does not provide the protection and planning people think and hope it does. Placing property and other assets into a trust allows the family and guardians to avoid probate. Also, court proceedings upon the parents’ death or incapacity. Thereby allowing property, financial resources, and other assets to be immediately available to the children.
Beyond real estate, a trust can incorporate other financial assets, including bank accounts, retirement accounts, and life insurance. Generally speaking, leaving financial assets outright to minors is not always the best idea. As a result, a trust often provides a way to protect these types of assets from benefiting minor children. Ensuring that the money will be used for appropriate purposes. Not wasted unnecessarily by either minor children or named guardians. A trust provides a sort of checks and balances for the expenditure of financial assets. Providing a means to protect money left to children and for use by guardians for specific purposes. This allows parents to include wishes regarding how the money would be spent on children. Both while they are minors and furthering their education or starting their own careers and families. It also provides the option to protect assets for future unknowns. Such as creditor issues, divorce, special needs, and substance abuse, among other things.
Lastly, it is important to remember that estate planning is not just about what happens after we die. But also what happens while we are living. Anyone who is over the age of eighteen should have a plan. Including healthcare and financial powers of attorney in place. At the very least. These are important documents that name someone (the “agent”) you choose to manage your finances, pay your bills, and make healthcare decisions for you in the event you are not able to do so yourself. The first choice is often someone’s spouse. But it is important to consider naming an alternate agent as well. These documents are also important as parents send their young children off to college. To ensure that the parents will continue to be able to assist their children with decision making.