You have decked out the nursery, filled the drawers with tiny clothes, and installed a car seat. Now it is time to consider one of the most critical things on your “to-do” list after having kids – estate planning. While no one likes to think about the bad things that can happen in life, it is imperative to plan for them once you have children. Here are some of the minimum estate planning issues you should address once you have kids.
Prepare Living Documents
By preparing a medical power of attorney and a statutory durable power of attorney, you ensure that if something happens to you, someone can still access your funds to take care of your children. If you are incapacitated, your medical agent can make medical decisions for you as well.
Pick Guardians and a Trustee
If something happens to you, your children will need two things to ensure they are properly cared for – a guardian and a trustee. A guardian can make daily, educational, and health care decisions for your child. The court will ultimately officially appoint a guardian based on the “best interests” of your child. While a court will consider the guardian that you name in estate planning documents, they can overrule the decision if the court believes you have made a wrong choice or it is not in the best interest of your children. You and your co-parent need to have an extensive discussion together and with your potential guardian in advance in order to overcome any potential obstacle that may arise.
A trustee will handle financial matters for your child in your place. While your children may only need a guardian until they are 18, a trustee may be necessary until your children are financially competent and are responsible with their inheritance. Your trustee can handle your children’s financial matters in the interim and eventually distribute the remainder of your estate to your children.
Post-mortem documents, like a last will and testament, trust, or testamentary trust, focus on what happens after you die. Minors can not own property, so any estate plan you create should account for how and when your children will eventually access your remaining assets. When developing these documents, you can consider your wishes for your child’s future. Do you want the trustee to pay for summer camp? Do you have strong feelings about college? Your trust and guardian documents allow you to set out your views and expectations of your children if you die while they are young.
Review Your Life Insurance
When many people first have children, they are not as financially stable as they are later in life. You should account for supporting your children if you die before accumulating enough assets to do so. An excellent way to do this is through a life insurance policy. Many people do not know that a trust can be the named beneficiary of the policy while your children are young.
If you are beginning the estate planning process or updating your plans to account for new children or even grandchildren, Hegwood Law Group offers comprehensive estate planning services. Call us at (281) 885-8826, or click here to schedule your strategy session.