Estate Planning Tips for Young Families
When we are young, we think that we have all the time in the world to do “adult” things such as planning for retirement, saving for a home, preparing for a family and planning for emergencies. Planning for our death is not even on our radar as we do not consider that a remote possibility because we are young, healthy and in the prime of our life. However, we go to sleep one day and wake up with three young children, a mortgage, two car payments and more responsibilities than we could ever imagine.
By the time we being to think about estate planning, we are too tired, too busy and do not have a penny to spare to pay an estate planning attorney. The fact is that we should never be too busy to plan for our eventual death. Estate planning does not have to be expensive for young families because they can begin with just the essential documents necessary to protect their children in the event of their death and continue to build upon their estate planning foundation as their finances, assets and circumstances continue to change and improve.
A good estate plan for a young family will include the following:
This person is named in your Last Will and Testament as the person who will be responsible for administering your final financial affairs through your probate estate. Examples of duties of include, but are not limited to, identifying and determining the value of your assets, reviewing and paying allowable debts, identifying heirs and distribution assets to those heirs. Choose someone who knows your wishes, someone you can trust and someone who will carry out you wishes after you are deceased.
Choosing a Guardian for Minor Children
This is the most important decision you will make during estate planning. If you fail to name a guardian for your children, the court will appoint a guardian who may or may not be the person you want to raise your children should you and your spouse die. The guardian you choose should share your views and beliefs about raising children as well as be someone you can trust to do what is in the best interest of your children.
Choosing the Person to Manage Your Children’s Inheritance
This is the second most important decision you will making during estate planning because this will provide for the financial needs of your children as well as ensure the money you leave is invested properly for them until they reach a certain age. If you fail to name a conservator (the person who handles the money of a minor), the court will appoint a conservator to manage your children’s inheritance.
The person the court names as conservator may or may not be the guardian you named for your children. It could even be a complete stranger. This person is entitled to receive payment for his or her services from the inheritance funds and each child will receive his or her inheritance when the child reaches the age of 18 years. In most cases, parents do not want their 18 year old to receive a substantial amount of money at such a young, vulnerable age.
By setting up a simple trust, the parent can choose the trustee who will manage the trust, which is funded by the inheritance, as well as specify terms of how the money is to be used, how it should be invested and when each child will receive his or her share of the trust funds.
Young couples may find that term life insurance is the best alternative because it is less expensive and designed to be used to replace the income of a deceased spouse rather than a retirement planning tool. Things to consider as you are reviewing insurance options with an insurance agent include:
Income earned by one or both parents will need to be replaced;
You may need to hire a person to take over the responsibilities of a stay-at-home parent;
You may need additional coverage to provide for children until they are grown;
You may need additional coverage to provide for children’s college funds if you do not have a college savings account in place; and
You need enough to cover the payoff of major bills such as your mortgage and vehicle to protect those assets for the surviving spouse.
When you are discussing estate planning with your attorney, he will want to know how you want to disburse your assets upon death. Most couples decide to leave all of their assets to each other in the event of death; however, if both spouses are deceased, they must decide how to distribute their assets. Some assets transfer automatically to the surviving spouse or other person through beneficiary designations or because of how title to the asset is held. However, estate planning is still needed to ensure that you have the proper estate documents to ensure your final wishes are carried out with regard to your assets.
Becoming disabled is another thing that most people do not like to consider but must include in their estate planning in order to protect themselves and their families. If you become disabled, you do not want the state to intervene and make decisions on your behalf. By using estate planning tools such as medical powers of attorney to give someone legal authority to make healthcare decisions on your behalf if you are unable to do so and HIPPA authorizations to give doctors permission to discuss your medical situation with others (parents, siblings and close friends), you can avoid situations where the state will make decisions for you.
You should also consider purchasing disability insurance because life insurance does not pay until death. If you become disabled, you will need income to provide for yourself and your family.
Talk to the estate planning attorneys at Krause Donovan Estate Law Partners, LLC. Their experience and knowledge can help you have the peace of mind of knowing not only that you have a plan, but that your plan still creates exactly the legacy that you want. Contact Attorney Daniel J. Krause or Nelson W. Donovan today.
Reach us through our website or call our office at (608) 268-5751 to schedule your confidential, no obligation initial consultation