When you’re young, estate planning likely isn’t on the top of your mind. Younger age and being in relatively good health can give you a false sense of security. But the reality is a tragedy, and unfortunate circumstances can strike at any time.
Young families with children need estate planning to ensure their assets and kids are taken care of. Determining who will care for your children and how your financial assets will get distributed is important at any age. Without a will, health care directive, and estate planning, the court will take over, and your wishes might not be fulfilled.
Questions to Ask When Estate Planning
Young families with children need to ask who will assume guardianship if something happens to one or both parents. Families also need to determine who will serve as power of attorney, estate executor, and what life insurance and trusts cover. In addition, a health care directive will spell out who will make your medical decision if you’re unable to.
Who Will Take Care of My Children?
If you and your partner were to pass away or become incapacitated, you might wonder who will take care of your children. Most people consider friends and other family members first. However, those without a suitable candidate within those pools of people can consider coworkers, acquaintances, and even professional contacts.
That said, you don’t want to choose a guardian for your children on a whim. And you may need to update your will as time goes on and things change. You want to consider whether your prospective guardian is financially and physically able to care for your kids.
Other factors you should evaluate include geographical proximity and the person’s lifestyle and care philosophy. Of course, you want to select someone who will raise and care for your children in a similar way. And you want a financially secure guardian who can provide your kids with good living conditions.
Who Will Make Financial and Medical Choices if I Am Unable?
Estate planning isn’t just about what happens when you pass away. It also includes instructions for a power of attorney and a medical proxy if you’re no longer able to make decisions. Say you sustain serious injuries in a car accident and are in a coma for six months.
During that time, someone needs to care for your kids and make your medical and financial decisions. This person might be your spouse, and your state’s laws could come into play here. States with common law marriage laws are examples. However, the person you designate as the power of attorney or your medical proxy doesn’t have to be your life partner.
Who Will Be My Executor?
An executor of an estate carries out the instructions of a will and/or living trust. This person ensures your financial and non-financial assets get distributed according to those instructions. Own a house or other real estate? The executor will ensure ownership is transferred to your designated beneficiary.
An executor will also oversee the sale of any assets and the distribution of the proceeds. Say you don’t want to transfer ownership of your home upon your death. Instead, you want to sell or donate the property. You’ll want to determine who will be charged with overseeing the execution of your will and these types of instructions.
For obvious reasons, your executor should be someone you trust and who is good with finances. It can be a family member, a lawyer, or a close confidant.
Essential Estate Planning Documents
As part of your estate planning, you’ll need to include several critical documents. These documents include a last will and testament and a health care directive.
Last Will and Testament
Your last will and testament say what happens to your assets and children when you pass away. Or another type of tragedy renders you unable to physically and financially able to care for them. For example, you could sustain a brain injury that makes it impossible for you to work or physically care for your kids from a hospital or rehab facility.
The last will and testament outline the distribution of assets like vehicles, real estate, and keepsakes. Inheritances can also include the use of life insurance money, trust funds, savings accounts, and investments. Besides instructions for asset distribution, a last will and testament say who will assume guardianship of your children.
Health Care Directive
A health care directive says who has the authority to make your medical decisions if you’re not physically or mentally competent to do so. However, you can change who your medical proxy is at any time. Once you designate someone, they don’t have to remain.
You might want to change your point person if they move away, die, or become incapacitated themselves. Or you’re one of many young families that starts out with a single parent. But later on, you marry or remarry and want to designate your spouse.
Power of Attorney
A power of attorney document says who gets to make your financial decisions if you’re not able to. Say you go into a coma for a year. Unfortunately, your bills don’t stop, and they need to get paid. A power of attorney can use your financial resources to pay bills and can make major decisions, including selling your home or purchasing investments.
You can also change your power of attorney at any time. Your power of attorney might be the same person as your medical proxy or someone completely different.
Looking for Estate Planning Assistance?
Young families often overlook estate planning because they think time is on their side or it’s something for those with great wealth. However, that couldn’t be further from the truth. All families need to create a last will and testament, a health care directive, and a power of attorney document.
These legally binding documents ensure your children are taken care of, and your medical and financial decisions are made according to your wishes.
If you need help with estate planning, contact CJB Law at your earliest convenience.