Many parents say they would do anything for their children, but have you?
In most cases, if one parent dies, all of their money and property transfers to the surviving spouse. But what if both parents die? Or what if one parent dies and is unmarried to the other parent of the child? Because of the endless “what if” scenarios, it is a good idea for young parents to think about estate planning. If you have any questions after reading this article, please give us a call for your FREE consultation or check out our estate planning page here.
Many young couples believe they are too young to begin thinking about death or do not feel they have enough assets to consider their estate. If that is you, do not worry, that is perfectly normal! However, both thought processes are flawed. There are only two things guaranteed in this world, death and taxes, and death passes over no person. Even a healthy, young adult can be suddenly overtaken by an accident or an illness. Most importantly, young couples have the greatest asset of them all: family and children who depend on their support. The only ones that suffer from a lack of an estate plan or worse, one that does not work (proper formation & funding issues…etc), are the ones you leave behind. Understanding the consequences of not doing any estate planning is critical.
Parents want to ensure that their kids get their inheritances as quickly as possible. However, in many cases distributions should be delayed, given in non-lump sum payments (to avoid waste, spend, immaturity of the beneficiary(s)), and protect against future dependency issues (such as alcoholism). Having a child get lose their inheritance because they weren’t ready for it can be devastating. Additionally, parents want to decide who their minor children will live with, and be raised by, in the event of their passing. A prepared parent will want to make these decisions during their lifetime so that a court does not decide for them.
How to plan your estate as a Parent
First, every family is different so understanding your unique situation and goals are essential. Factors that differ among families include their dynamics, asset types including retirement accounts and insurance products, age of their children, and long term issues that could arise for them or their children in the future. Assets to think about, which can be added to your estate plan over time, include both real and personal property, motor vehicles, some retirement accounts, life insurance policies, bank accounts, and securities.
Once you know your assets, your goals, and other factors, you need to find the right estate planning solutions. A cost effective document from an Orlando will attorney that can be drafted is a Last Will and Testament (also referred to simply as a “Will”). While a Will can list specific bequests for your most prized personal possessions, the greatest value of a Will for young parents is the ability to name proper guardians to care for their children in the event something happens to both parents. Make sure this document is properly drafted and executed pursuant to all the legal requirements in Florida. If not, it will not be valid on its face and at the very least, any Last Will can be challenged by beneficiaries
Generally, trusts are the most comprehensive instrument to protect your assets and family. The trustee you designate will oversee the process and distribution of your estate. The benefits of a trust can include the ability to:
- Put conditions on how and when your assets are distributed after you die, such as specific milestones like birthdays, graduation, upon marriage, upon specific ages, or if your children have dependency issues like alcoholism;
- Limit the use of funds to specific uses such as paying for health, education, maintenance, and support (HEMS) of your beneficiaries;
- Reduce both estate and income taxes;
- Avoid the delays of probate, which can cause your beneficiaries to not get your assets for up to nine months to two years;
- Maintain privacy since unlike wills, trusts do not become a matter of public record;
- Prevent lump sum payments that are often paid out by will inheritances, life insurance policies, or large retirement accounts (far too often to immature, financially uneducated young “adults”);
- Greater protection from creditors of both you and your beneficiaries;
- Make arrangements for children or adults with special needs while ensuring they continue to receive their needed government assistance;
- Select trustee(s) as well as successor trustee(s) to manage your assets on behalf of your beneficiaries years after your passing;
- Preserve family heirlooms from generation to generation;
- Continue family businesses; and
- Allow trustees or other professionals to make educated and informed decisions for unexpected events that may occur in the future.
- Maintain family harmony so the beneficiaries do not fight or sue your estate, thereby reducing the amount of your estate.
To prepare for all the possible different outcomes life may throw at you, it is a good idea to look at other estate planning documents other than wills and trusts. Power of attorney documents (financial and other decisions), living wills (what to do if you are in a vegetative state plus more), healthcare surrogate documents (allow someone to make healthcare decisions for you), life insurance trust, elder law protections, and much more.
Preneed Guardians for your Children
Guardianship of your minor children is extremely important topic to address. Make sure to include guardianship forms that describe who you would like to care for your children if you and/or your spouse become incapacitated. Many times guardian nominations in a will only determine who will receive your children if you die. Find comfort in knowing that your children are well taken care of under any circumstances and learn more about preneed guardians here.
If we all knew when we would die, then it would make estate planning a quick and worry-free process. Is there a better time than NOW to get started? No, so what are you waiting on? As touched on previously, tragedy can strike anytime, anywhere, and to anyone. It is extremely important for adults with children to properly plan for the possibility that their kids may need to be raised and cared for by someone other than themselves.
Deportation, debilitating disease, and incapacitation are all situations that can leave your child helpless and in need of a guardian. If you draft a will, but you and your spouse are incapacitated, then you will be unable to physically or financially provide for your family.
Fortunately, the Finity Law Firm provides powers of attorney, living wills, healthcare surrogates, and certifications of trusts completely free of charge with every trust that is completed for our clients because we want you to be protected! Getting the right estate plan for you and knowing it will work when the times comes due will give you the peace of mind you deserve. If you already have an estate or want to learn more about what to avoid when planning check out our top 10 estate planning tips. Contact our law firm today to get a FREE estate planning consultation so you can learn more. We would love to help you and your family!