Unlocking a Secure Future for Your Young Kids: Create the Ultimate Estate Plan
Estate planning is not about you, or even about you and your spouse. Estate planning is about making difficult decisions, so your loved ones don’t have to make them for you when you are gone. Estate planning is about securing your assets for your minor children and heirs by avoiding probate and ensuring someone is there to manage those assets for them. Ensuring the well-being and future security of your family requires having a plan, especially when you have minor children. Estate planning can seem overwhelming, but with a few careful yet simple decisions, you can provide a secure future for your loved ones. Some key components of an effective estate plan for families with minor children:
Create a Full Estate Plan that considers Young Children – not Something you Pulled off the Internet
Estate planning is not just about distributing assets: it’s about avoiding probate and designating the right people to manage your estate and parent your children, if they are too young to care for themselves. For families with minor children, should you die or become incapacitated, you will not be able to manage your assets or parent your kids yourself. You will need to put in place documents that nominate the right people to protect your minor children’s well-being and your assets.
Designate Legal Guardians
One critical estate planning goal for families with minor children is designating a legal guardian. A guardian is responsible for your children’s well-being and upbringing if you and your spouse are unable to do so. You should carefully select individuals whom you trust to parent your children. You should also make sure this person is willing to assume these duties. The designation of a guardian is usually done in the Will. However, you can’t assume that your guardian will automatically get your children. First, a guardian cannot supersede the custody rights of a living legal parent. So, you can’t remove your ex’s parental rights through an estate plan. Also, a guardian may be vetted by a court to see if this person serves the best interests of your minor children.
Establish a Trust
Creating a trust is a strongly recommended tool for managing and distributing your assets for the benefit of your minor children. Upon your death or incapacity, a properly drafted trust will name a successor trustee to manage your assets on behalf of your minor children. Designating a successor trustee to oversee the trust’s assets and financial matters for your children ensures that their financial needs are protected until they reach a specified age or life milestone.
Plan for Education Expenses
Consider including provisions in your estate plan to fund your children’s education. Planning for their educational needs doesn’t require a lot of effort. A properly drafted trust should have terms that allow for distribution for educational purposes. A trust can have other terms that require your children to be of an age older than 18 to take their full share. You can also create specific accounts to help plan for education, e.g., 529 plans, Education Savings Accounts and UTMA accounts.
Plan for Incapacity
Most people only think about estate planning in the event of their death. However, if you are incapacitated, you will likewise be unable to manage your financial affairs and assets. If you have young children, they will also be unable to manage your assets and affairs. Most people don’t realize that incapacity can take many different forms: Alzheimer’s or dementia, being on a ventilator with COVID or pneumonia, or even mental illness and addiction are all situations that can lead to a person being legally incapacitated. Putting into place the right terms in your trust and creating powers of attorney will allow a trusted person to manage your medical and financial affairs if you are incapacitated. Planning for incapacity is just as important as planning for your death.
Review and Update Your Plan Regularly
Life circumstances change, and your estate plan should change accordingly. Most notably, people grow older, friends and family move away, die, or become hostile. You may gain business or real estate assets. Reviewing and updating your estate plan to reflect financial, family, social, and other circumstances is critical to having a well-maintained estate plan. In addition, there are often changes in federal and state laws that may affect estate planning.
Communicate Your Estate Planning Wishes Clearly
Open and honest communication with your nominated legal guardians, trustees, and family members is crucial. It is important that you do not keep these nominations secret. Absolutely, you should not surprise anyone with your nomination of that person to take care of your kids or manage your assets. Clearly articulate your wishes and expectations about asset management and distribution. A professional can help you craft clear and concise language that demonstrates your intentions. This clarity ensures everyone is on the same page and acts in the best interest of your children.
The Essence of Thoughtful Estate Planning
Estate planning for families with minor children is not about the parents. It’s about planning for the time when the parents are no longer capable of caring for their children and assets. Taking the time to make informed decisions helps secure your children’s future, regardless of what life may bring to the parents. Seek professional guidance, communicate your wishes, and stay proactive in reviewing and updating your estate plan to provide a stable and promising future for your loved ones.
Brittany Labadie is the Managing Partner at Lewis Labadie. She has been working with Lewis Labadie since it opened. Her current focus is with adoption cases, including juvenile adoptions, adult adoptions, foster care adoptions, same-sex adoption, surrogacy adoptions, and when necessary termination of parental rights. She works throughout the State of Arizona.