ESTATE PLANNING
Estate planning is especially important for parents of minor children
Why is it important for new parents to have proper estate planning in place?
My wife and I became new parents in April, and we recognize the true blessing Jack is to our lives. We also understand what an important responsibility we have to protect and care for him. While not a fun topic to discuss, choosing the legal guardian for your children is just one of the critical decisions for a new parent while updating or completing your estate plan. I often say there are a lot of people who look good on paper who may be your last choice to raise your child. Choosing a guardian is better than leaving it up to state law or forcing a judge to decide for you.
What are some common misconceptions about estate planning for new parents?
People often believe only ultra-rich families need planning. The truth is everyone with children, regardless of the amount in their accounts, needs a plan. Additionally, clients are often surprised to learn that a will still has to go through probate. Probate is the legal process to determine the existence and validity of a will, assess the value of the decedent's assets, pay creditors and ultimately distribute assets through the order of the probate court. We work with many new parents to avoid the public nature, the time needed to complete and the costs associated with the probate process through fully funded trusts.
Why isn't life insurance enough?
Parents often take the responsible step to place insurance policies on themselves to provide for their children in case of an untimely death. It can be problematic to have large policies in place without a corresponding coordinated plan on how and when your children will receive funds. Most parents can't envision giving their children a large amount of cash at age 18, but it is exactly what could occur without putting a plan in place. Personally, I don't want Jack driving a Corvette at age 16 or a Crazy Cousin Eddie managing his money. I believe there needs to be safeguards in place to allow children, who have lost their parent(s), to mature and not have money lost or squandered which could benefit them for a lifetime.
What steps should new parents take?
It is my recommendation to work with an attorney or firm who is committed to making sure you understand why your plan is specifically crafted to your family and when it needs be updated so it continues to protect your family through the years. The plan you put in place today will likely be significantly different in five, 10 or 20 years. You need an attorney and firm you can trust and communicate with well, a firm that will also transition to work with your loved ones even after you are gone.