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4 Estate Planning Tips When You Have Young Children

4 Estate Planning Tips When You Have Young Children
Michelle T. Thompson, Esq., CFP®, CTFA, CDFA®
October 14, 2019
  1. Write a Will

For most young parents, writing a will is less about distributing assets and more about naming a guardian for their children. The guardian named in your Will is the person that would take care of your children if you and the other parent were unable to do so. This situation is very unlikely, but worth addressing just in case.

If your children ever needed a guardian, the local Probate Court would appoint the person designated in your Will, absent a serious problem with that person. You can name different guardians for different children if you wish. If you do not have a Will with a Guardianship Designation, or if you haven’t made your wishes in the Will clear, the Probate Court would have to select a guardian for your children without any guidance from you. The most common choice is a family member. But what if you really wouldn’t want a certain family member to raise your children? Or what if you preferred that a close friend step in as guardian? The Court would have no way of knowing your wishes.

Another major reason to write a Will is that if you don’t, and either you or your spouse dies, some of your property, assets, and money will not go to you or your spouse, but instead will go directly to your children (to be held in trust until they reach the age of 18). When given a choice, most people prefer that their money go to their spouse, who will in turn use it for their children’s’ benefit.

  1. Buy Life Insurance

This is more of a financial planning task rather than an estate planning task, but it needs to be addressed when considering how to take care of your children. Purchasing a life insurance policy that would replace your earnings for a few years is a great way to ensure that your family is supported, if either you or the other parent dies unexpectedly.

  1. Write Durable Powers of Attorney and Living Wills

Every adult should have an Advanced Healthcare Directive (Living Will) and Financial Power of Attorney. If an accident or sudden illness strikes, these documents will make things much easier for your family.

In your Advanced Healthcare Directive, you select certain treatment preferences for end-of-life care. For example, you may indicate that you want everything necessary to relieve pain (called palliative care) but don’t want extraordinary measures such as CPR in certain circumstances.

Everyone, even young and healthy individuals, need these documents. If you were seriously injured, these documents would let your family know what you wanted, sparing them difficult decisions and preventing disagreements.

  1. Designate Beneficiaries for Retirement Accounts

One last simple (and free) step to consider when planning your estate is to name beneficiaries for your retirement accounts, such as any IRA or 401(k) you’ve opened. All you need to do is fill out the beneficiary form provided by your employer or the account custodian, and if you want to change it later, you can just fill out and submit a new form. By designating a beneficiary, you ensure that the funds in the account go directly to the person(s) named, without having to go through Probate.

Families come in all shapes and sizes, and so do estate plans. At Atlanta Financial, we don’t try and fit everyone into a “one-size-fits-all” mold, we take the time to listen and understand your personal goals. Contact us to start protecting your family today.

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