Because they are young and healthy, many young families do not feel the need to create their own estate plan. Others are in the beginning of their careers and feel that an estate plan is too expensive. However, creating an estate plan is the wise decision. Although it will probably not happen, accidents and severe sicknesses can still happen to young parents. Doing estate planning can not only protect young families now, but can help them organize their finances and help them prepare to develop their wealth in the future. Young families also do not need to get a “premier” estate plan now; they can get the basics now and adapt and upgrade their estate plans as their lives develop.
A Good Estate Plan for Young Families
Young families do not have the same estate planning needs or circumstances as an older family. The following are some important parts of an estate plan for young families
Naming a Personal Representative
If something should happen to the parents, their personal representative will have the authority to make decisions about their financial affairs, locating and distributing assets, and hiring any professionals to help. Young families want to make sure that whomever they ask to serve as personal representative is responsible and can be trusted to make these important decisions.
Naming a Guardian for Minor Children
One of the most important-and most difficult-decisions for young parents to make is who will raise their children if something should happen to the parents. However, this decision is one of the most critical decisions to make because if the parents do not make this decision, a judge will have to make that decision without any input from the parents. Naming a guardian now will allow young parents to choose someone they trust and whose parenting style most directly lines up with their own.
Providing Instructions for Distribution of Assets
Most people care where their property goes after they die. Most often, young parents want their property to be used to provide for their young children. An estate plan can help ensure that this happens by taking control of their property and pro-actively and clearly stating where they want their property to go and how to use it.
Naming Someone to Manage the Children’s Inheritance
If you do not name someone to manage your children’s inheritance, the probate judge supervising your estate will have to name someone. This supervisor, called a “conservator” can be paid from the inheritance and there are annual financial reports and other administrative requirements. Once your minor children turn 21, they will receive their full inheritance in a lump sum. Establishing a trust can remove all of these negative possibilities, as parents can decide who will administer their children’s inheritances and there is much more control and flexibility of when the children will receive their inheritances.
Reviewing Insurance Needs
Life insurance is one of the most well known methods of replacing income. Parents of young families should review their life insurance policies with a qualified professional to determine if their benefits are enough to meet their future financial needs and goals.
Planning for Disability
Passing away early is the not the only possibility for young parents. One or both parents could become disabled or incapacitated because of an accident or illness. In this situation, young parents need to have medical and financial powers of attorney to allow their spouse to make medical and financial decisions for them. HIPAA Waivers would allow doctors to discuss the incapacitated parents’ medical situation with others, such as a spouse, family members, or others named in the powers of attorney. If the parents are in an appropriate situation, they may want to consider getting disability income insurance to help fill any income gap in the event of disability.