What Every New Parent Needs To Know About Estate Planning
If you are a new parent or expecting your first child, estate planning may be the furthest thing from your mind. However, becoming a parent is when estate planning becomes essential.
As a parent (or grandparent!), there are thousands of things to worry about. Having children in your life creates responsibility, and one of those responsibilities is ensuring that you have provided for their care if you are ever unable to provide it yourself.
Do I Need a Will?
The first thing that many people think of when they hear the words “estate planning” is a will - especially when it comes to children. Many of us conjure images of movies where the will is read out and the children gather around to hear what they “get.” In reality, wills can provide a lot more than a simple distribution of your worldly possessions. There are also other ways to make sure your wishes are carried out after you pass away.
In fact, while most people should have a written will, it should act more as a catch-all for the assets that cannot be transferred in another way. When you allocate assets in a will, they become subject to your state’s probate process. This means that your family will have to go before a probate court and follow a process that ensures that your will is fair and authentic. This process is time-consuming, costly, and public, as your will is entered into the public record.
However, it is not a bad thing to have a written will. While many assets, such as bank accounts, insurance policies, and retirement accounts can be transferred to heirs simply by naming a beneficiary, it is best to have a written document that catches any assets that fall through the cracks: either because they cannot be transferred outside of probate or because beneficiaries have not been named or recently updated.
When drafting a will, take into careful consideration who you will name as the personal representative of your estate. This is the person who will be responsible for carrying out the decisions laid out in your will and distributing your assets in accordance with your wishes.
Guardianship of Minors
If you have minor children, nominating guardians is the most important function of a will. You must choose a trusted adult who will be able to step in and care for your minor children should you become unable to care for them, either because of premature death or incapacity due to illness or injury. This trusted individual will care for your children while they are under the age of 18. If you do not have a will or do not nominate a guardian, the court will appoint a guardian for your children on your behalf. The court may choose someone that you would not prefer, and a court appointment may result in disputes or even legal battles among your family members.
Choosing a guardian is a deeply personal decision and one that should only be made after careful consideration. Nominating a guardian for your minor children can be different than choosing a trustee, who will manage a minor’s inheritance of property and assets until he or she reaches adulthood. This will be discussed in the next section.
There are a number of factors you will want to consider when choosing a guardian for your minor children:
● Who would the children choose? If your children are old enough to give input, you may wish to include them in the decision.
● Is the person willing and able to be a guardian of your minor children?
● Does the person share your religious and moral values? If specific religious beliefs and/or values are important to you, make sure that the potential guardian shares in your philosophies.
● Is the person married or unmarried? Do they have children of their own? Where do they live? Can their home accommodate children?
It is important to think through all of these questions. There are no right answers to who will be the best guardian for your children, but it is important to consider all of the implications of this decision.
The guardianship nomination provision in your will should nominate a guardian and a successor guardian. It is essential to nominate at least two individuals in the event that the first guardian is unable or unwilling to take on custody of your children at the time.
When you meet with an experienced estate planning attorney, like the ones at Kira Doyle Law, be prepared to talk through all of these issues before you make a decision about who you would like to nominate as a potential guardian. He or she can inform you of any statutory limitations to nominating a guardian. You can also work with an attorney to draft a document providing specific instructions for raising your children.
Providing for Your Children: Revocable Living Trusts
Minor children cannot inherit money or property outright until they reach adulthood. If you die while your children are still minors, it will be important to create a method that allows your children and their guardian to receive financial support from your estate. Creating a revocable living trust is a great way to ensure that your children will be provided for, even if they are still minors.
A revocable living trust is a way to allocate assets for a beneficiary while you are still alive. Because the trust is revocable, it can also be amended, terminated or revoked at any time while you are alive. When you create a revocable living trust, you will appoint yourself as the initial trustee so that you remain in control of your assets. However, when you become incapacitated or die, your trust will become irrevocable (unchangeable) and control of the assets will pass to the successor trustee. You can appoint any trusted individual to be the successor trustee (this can be the same person you selected to be guardian of your minor children or another person). You may also appoint a corporate or professional trustee to serve as the successor trustee. This trustee will be responsible for ensuring that the guidelines of the trust are carried out. Some guidelines may include distributions to the guardian to provide for the health, daily needs, education, and child care of minor children, or they may provide that the trustee distribute the assets to your children as soon as they reach maturity. These guidelines can be tailored specifically to your family and your wishes.
The successor trustee should be someone trustworthy and reliable. Take into consideration the fact that the trustee and the guardian will need to work closely together to ensure that the child is cared for and that the guardian has access to funds needed to provide for the child’s care.
If you have adult children and guardianship is not an issue, a revocable living trust is still a great option. Again, it allows you to retain control of your assets until you are unable to do so, and then the funds can be made available to your adult children in accordance with your instructions. Assets distributed through a revocable living trust are also not subject to probate, so you will be able to pass assets to your beneficiaries without the delay, public involvement, or cost of going through the probate process.
Powers of Attorney, Designations of Health Care Surrogate, and Living Wills
If you worked with an attorney before becoming a parent (or grandparent), you may want to revisit these documents with children in mind. You and your attorney can discuss how these decisions may impact your children.
A Power of Attorney is a document that specifies who will take care of your personal and financial matters in the event you are unable to do so. Keep your children in mind and choose someone you trust and who you know will act in your and your children’s best interests.
A Designation of Health Care Surrogate is a planning document that names the person who will be legally empowered to make medical decisions on your behalf either immediately or if you become incapacitated.
A Living Will (also called an Advance Directive) will lay out your preferences for end-of-life care. It will allow you to specify how you would like matters such as resuscitation and pain medication to be handled in the event that you are unable to state your wishes.
Ask Questions and Get Answers From a St. Petersburg Estate Planning Attorney
Having children can be stressful and one way to ease some of these worries is to ensure that your children and heirs will be taken care of when you are no longer able to provide for them. Estate planning is a great way to make sure that your children are well taken care of and there are many ways that you can work with an attorney to help give you peace of mind. For more information regarding our estate plans for you and your minor children, call our office in St. Petersburg, Florida at (727) 537-6818 to speak with one of our experienced estate planning attorneys today!