As a new or soon-to-be parent, you understand the importance of safeguarding your children. Along with baby-proofing your home and choosing the right car seat, have you established a contingency plan for their care if something happens to you? Have you considered the fate of your assets and how they can be transferred to your children while they are still minors?
Many adults, including new parents, tend to delay addressing these concerns, but it's not a wise approach. While we can't predict the future, proactive planning can provide peace of mind. We want to ensure our children are well taken care of if we pass away or become unable to care for them.
Whether you're already a parent or planning to become one, it's time to start considering estate planning measures to protect your children and their future inheritance.
If you haven't already made arrangements to ensure your child is placed in the appropriate household, it is crucial for the well-being of your entire family. Consider the peace of mind that comes with knowing precisely how your children will be cared for in the worst-case scenario. To enable this peace of mind, designating a short-term and long-term guardian in your will is a good safeguard.
In the unlikely event that both you and your partner pass away simultaneously, you should review your beneficiary designations under life insurance plans and various investment accounts. These designations will be critical to make sure your minor children will have ongoing access to funds for their education and development. Beneficiary designations often can be made in the name of a revocable living trust.
A trust can serve as a powerful tool for transferring your estate to your children while promoting responsible asset utilization. Revocable living trusts are often the preferred choice for parents which become irrevocable at the death of the trust-maker.
Trusts can allow you to provide guidance to your children and pass on your values and wishes after you are gone. There are many ways to direct that funds are used for certain purposes, while simultaneously providing flexibility that acknowledges the future is unknown, and your children may take different paths as they develop educationally and emotionally.
If your child has special needs, a special needs trust can help protect government assistance eligibility while setting aside funds. Trustees can use the funds for goods or services that enhance the beneficiary's quality of life, like education or personal care attendants. If finding a trustee is difficult or you only plan to include a small amount, consider a pooled trust where funds are combined from multiple families and managed by a nonprofit organization.
Life insurance plays a pivotal role in estate planning, particularly for families with minor children. In the unfortunate event of both parents passing away, a life insurance policy can secure the financial future of the children. The benefit from the policy can be used to cover immediate expenses and future expenses such as education costs, healthcare, housing, and other living expenses. You will want these policies to be paid to your trust or even a custodian under the Uniform Transfers to Minors Act (UTMA). Appropriate designation of a trustee or custodian should be part of your estate planning process, ensuring your minor children are financially protected. It is important to involve your attorney and financial advisor in this process.
Estate planning is vital for securing your children's future. Mechanisms like use of life insurance proceeds and trusts preserve and responsibly utilize your assets. Remember, estate planning requires regular reviews as your family evolves. Our firm can provide the guidance and assistance your family needs to help make sure your family is protected.