Attorneys who focus their practices on estate planning, know that not every story has a happy ending. For some of them, estate planning for parents with minor children is a professional mission to make sure that young families are prepared for the unthinkable, says KTVO in the article “Family 411: Thinking about estate planning while your kids are young.”
It’s a very easy thing to forget, because it’s so unpleasant to consider. The idea of becoming seriously ill or even dying while your children are young, is every parent’s worst fear. But putting off having an estate plan that prepares for this possibility is so important. Doing it will provide peace of mind, and a road forward for those who survive you, if your worst fears were to come true.
Estate planning for parents with young children should start with a will. In a will, you’ll name a guardian. The guardian is the person who would be in charge of raising your children and have physical custody of them. Don’t assume that your parents will take over, or that your husband’s parents will. What if both sets of parents want to be the custodians? The last thing you want is for your in-laws and parents to end up in a court battle over custody of your children.
Another important document: a trust. You should have life insurance that will be the source for paying for the children’s education, including college, summer camps, after-school activities and their overall cost of living. The proceeds from a life insurance policy cannot be given directly to a minor. The guardian will hold proceeds until your child becomes an adult.
However, what if your son or daughter turned 18 and were suddenly awarded $500,000? At that age, would they know how to handle such a large sum of money? Many adults don’t. A trust allows you to give clear directions regarding how old the child must be before receiving a set amount of money. You can also stipulate that the child must reach certain milestones (like completing college) before receiving funds.
Estate planning for parents with young children should also include a Healthcare Power of Attorney for medical decisions. That allows a named person to make important medical decisions on behalf of the child. For medical decisions, it is best to have one primary person named. In that way, any care decisions in an emergency can be made swiftly.
While you are creating an estate plan with your children in mind, make sure your estate plan has the same documents for you and your spouse: Durable Power of Attorney, Healthcare Power of Attorney, a HIPAA Release and a Living Will.
Reference: KTVO.com (Feb. 6, 2019) “Family 411: Thinking about estate planning while your kids are young”