One of the most common estate planning mistakes is to put off creating a plan. If you are just starting your family, you may be at risk of making this mistake either because you do not understand the need for a plan or because you are busy with your new family and fail to make estate planning a priority. When your family is young, however, is exactly when having an estate plan in place can be the most important. To help you get started with your estate plan, the Essex Junction estate planning attorneys at Unsworth LaPlante, PLLC offer some estate planning basics for young families.
Why Is Estate Planning Important for Young Families?
When you become a parent, everything you do takes the best interest of your child into account. You worry about anything and everything that might harm your child. You also start planning for your child’s future education and financial security. All these worries and concerns should be incorporated into a comprehensive estate plan because a well drafted estate plan can go a long way toward protecting your child if something happens to you.
How Can an Estate Plan Protect My Young Family?
Your estate plan offers numerous opportunities to protect your young family from the possibility of your death or incapacity. Some commonly used estate planning tools and strategies by young families include:
- Choosing a Guardian. When you think about your Last Will and Testament you likely think about the distribution of your estate assets. As a parent of a minor child, however, your Will serves a more important purpose. In fact, your minor child cannot inherit directly from your estate, so the asset distribution function your Will serves has little to do with your children. Your Will is important, however, because it is the only official opportunity you have within your estate plan to nominate a Guardian for your minor children in the event one is ever needed.
- Creating a trust. Your minor child cannot inherit directly from your estate. To resolve this problem, and to protect your child’s inheritance, you may establish a testamentary trust that is triggered by a provision in your Will in the event of your death. The trust can hold your estate assets and distribute them according to the terms you create to be used for things you have authorized while they are minors. You also get to choose who will manage those assets by appointing the Trustee.
- Planning for Incapacity. An incapacitating accident or illness could also create a problem for your children if no one has the legal authority to access your assets for their care and maintenance. Creating a revocable living trust and naming a spouse or other trusted loved one as the successor Trustee is one common way to handle the possibility of your own incapacity.
- Life Insurance. Many young families do not yet have a substantial estate to leave behind to a child. If that describes your current situation, you may choose to supplement the assets you do have with life insurance. As part of your estate plan, you may decide to create a separate trust to hold the life insurance proceeds or designate an existing trust as the beneficiary to ensure that the proceeds are used as you intended.
- Power of Attorney. You may include reciprocal general durable POAs with your spouse as part of your incapacity plan. You may also need to provide a limited POA to a caregiver, so the caregiver has the necessary authority to authorize medical care for your child in an emergency.
Contact Essex Junction Estate Planning Attorneys
For more information, please attend one of our upcoming FREE webinars. If you have questions or concerns about estate planning for young families, contact the experienced Essex Junction estate planning attorneys at Unsworth LaPlante, PLLC by calling 802-879-7133 to schedule your appointment today.