Estate planning is essential for young families. Read on to learn about what estate planning is, why it matters, and how to get started
Have you established an estate plan as a young family?
Survey results reveal that 68% of Americans do not have a Will.
Everybody would do well to have a Will—but estate planning for young families is especially essential. Without an estate plan, your family could fall into unintended consequences. Estate planning ensures the safe future of your spouse and young children.
Unfortunately, estate planning is often the last thing on young families’ minds. If your assets are few, and both parents are fit and healthy, it’s natural to feel like there isn’t an urgent need for estate planning.
This couldn’t be further from the truth, however. Should the unforeseen strike, a lack of estate planning can be dangerous for young families.
Read on to learn why estate planning for young families is so important, and how to implement the basics of estate planning.
The Importance of Estate Planning for Young Families
There are four main reasons why estate planning for young families is so crucial.
Firstly, if one spouse passes away without an estate plan, you could lose control over marital assets. For instance, if you own a house that’s in only your deceased spouses name, you won’t be able to sell or take out a mortgage on the property until probate is over. If there are bank accounts or investment accounts solely in your spouses name, those will be tied up in probate.
Probate can take many months to complete, especially if the deceased didn’t have a Will.
If one spouse does not have a Will, their assets will be passed on according to state laws. In most states, 50% of the assets go to the surviving spouse, and the other 50% is split amount the children and received when they reach legal age. You could also find assets going to children from a prior relationship.
Another reason why estate planning is vital for your family’s security is that if something were to happen to you and your spouse, the court would have to decide on guardianship for your children. This too can be a lengthy and traumatic process, and it might not have the results that you would have wished for. Do you want a judge determining who will raise your children?
Estate planning gives you the chance to stipulate who should become the guardian of your children, and when they will receive their inheritance.
Without a comprehensive estate plan, you could also run into trouble if one spouse becomes debilitated and requires the other to make medical or financial decisions on their behalf. Through estate planning, you can ensure that if one of you cannot act for themselves, the other has the necessary power of attorney and health care proxy.
How to Carry Out Estate Planning for Young Families
Now that we have gone over the importance of estate planning for young families, how does one go about implementing an estate plan?
Below are the main steps involved in estate planning for young families.
Form a Will
One of the basics of estate planning is forming a Will. A will stipulates how you want your assets distributed after your death. As a young family, you might wish that all of your assets go to your spouse on your death, instead of 50% being held for your children until they turn 18.
In your Will, you can also appoint an executor/personal representative. In many cases, this could be your spouse. It could also be another family member you trust who is able and capable of handling your affairs when you pass, or your lawyer.
If you appoint an executor (also known as a personal representative) they may be able to administer your estate independently of the court’s supervision. If your Will is structured to avoid probate, the executor might be able to waive surety bond requirements and administer your estate faster and more efficiently.
Surety bond premiums can significantly increase the cost of probate. bonds can cost anywhere between 3%-7% of your estate value, so it’s a good idea to reduce these costs as much as possible.
Make Provisions for Your Children
While drawing up your Will, you should also make provisions for your children. Start by appointing a legal guardian for them in the event that both you and your spouse pass away. You can also stipulate to expressly exclude certain family members who you do not wish to be involved in the rearing of your children.
Before naming a legal guardian, it’s also a good idea to talk the plan over with them to make sure they are willing to handle the potential responsibility.
You should also stipulate how you want your assets distributed to your children by the legal guardian. Do you want them to receive all the assets upon turning 18? Or do you want to delay this? In most cases, you might also want to look into forming a trust for your children. A separate trust is a perfect vehicle for leaving assets to younger beneficiaries whereby a trustee can manage the assets on their behalf until they attain a certain age. You establish the age in which you would want the children to receive your assets outright.
Designate Powers of Attorney
Another important step in estate planning for young families is designating powers of attorney for your financial and medical affairs.
If you become incapacitated and are unable to carry out decisions, the person you give power of attorney to will be able to step in in your stead. If you aren’t able to manage your finances, they can file your taxes, pay your bills, and make financial decisions in your place.
The same holds true for medical power of attorney also known as a health care proxy. If you are unable to state your wishes, the person you appoint with medical power of attorney will be able to make medical-related decisions on your behalf.
Get Professional Estate Planning Help
If you are approaching estate planning as a young family, it’s important that you get the right guidance. If you are feeling unsure about the process, the best thing to do is consult with a legal professional who deals with estate planning.
A lawyer will be able to help you draw up a rock-solid will that isn’t open to dispute or misinterpretation. They will also be able to guide you in making provisions for your children, and ensure that your powers of attorney are durable.
When doing estate planning for young families, it’s also a good practice to evaluate your life insurance needs. A good lawyer will be able to help you get clear on what level of coverage is best for you.
We Specialize in Estate Planning for Families
Estate planning is essential for protecting your young family should the unforeseen arise.
Are you looking for assistance with estate planning for families? Estate planning is one of our areas of specialty here at Eliopoulos & Eliopoulos, P.C.
Contact us today to get your estate plan in place.