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4 Estate Planning Tips When You Have Young Children

4 Estate Planning Tips When You Have Young Children
Michelle Thompson, JD, CFP®, CTFA
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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What is the SECURE Act and does it matter to me?

The Setting Every Community Up for Retirement Enhancement (“SECURE”) Act was signed into law on December 20, 2019.  With all of the discussion in the news around the political uncertainty, impeachment, and the looming trade war, one of the largest changes to retirement savings laws in recent years was passed with very little fanfare.  However, some of the changes will be significant.  I have tried to highlight what may impact the majority of our clients and readers.

The Act has a lot of positives such as simplifying rules and making 401k plans potentially available to more workers, pushing back the RMD age, and allowing contributions to IRAs past age 70.  The negative impact I see is the elimination of the stretch IRA which is a clear move by the government to raise tax revenues by forcing money out of inherited IRAs sooner.  I will discuss in more detail below, but this should be a time to review beneficiaries and discuss whether any change in your legacy planning should be made in response to the new laws. What do you need to pay attention to?

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Famous last words…  Of course, as soon as they left the house, she was trying to walk – literally everywhere.  And after about 24 hours she was taking her first baby steps.  By the time they arrived back three days later, she was walking (a little unsteadily but walking none-the-less) and was very proud of herself.  Great strides in just a few days but predicated on all of the trial and error and lessons learned in the months before.

Financial planning is a little like this.  You’ll make mistakes along the way – everyone does.  But you will do a lot of things right as well and the important thing to remember is that your financial health is based on doing the little things right, all along the way.

So, what should you be doing when you are 22, 52 or 72?  Here are three important tips for each decade.

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Cathy Miller Receives the Women’s Choice Award® as Highly Recommended Financial Advisor by Women for Women for Seventh Consecutive Year

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As the leading advocate for female consumers, WomenCertified Inc. selected Miller based on rigorous research and specific objective criteria; she has received this recognition every year since 2013. 

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