Estate Planning Considerations for Families with Young Children
Along with all the joys of starting a family and raising children, many complexities and challenges come. However, estate planning in Huntsville, AL, shouldn’t have to be one of them.
Of course, there are many things to consider when you have children to think about in regards to planning your estate. You want to ensure that they’ll be taken care of no matter what should something unexpected happen.
It’s a depressing thought, but the planning needs to be done. Fortunately, with the help of the right Huntsville attorney, the entire process can remain quick and painless, so you can get right back to enjoying your family with the extra security of knowing that you’ve got a solid plan for the worst-case scenario.
Let’s talk about what those considerations are and how to get started.
Estate Planning with Young Children in Mind
The topic of estate planning with young children in mind is so frightening that only 36% of parents with young children actually have officially written their wills and trusts. However, considering the alternatives - as in passing on without an estate plan and leaving everything up to the state - it’s a lot less agonizing to think of what needs to be done.
You’ll have to ask yourself some of the more challenging questions about what needs to be done. For example, who would you want to take care of your children? Where would you want them to live? Would they have enough to get by financially speaking? What about their education? What about your assets in terms of heirs?
This is why it’s necessary to have a will and trusts in place.
While there are dozens of questions like the ones above you’ll need to answer during your estate planning, there are a handful of basic questions that are the most important. So here’s what you’ll need to address first:
Who Will Care for Your Children?
Choosing the suitable guardian for your young children when estate planning is arguably the most essential part. Unfortunately, it’s also one of the hardest things to do because it comes with its own set of considerations.
For example:
Can this person physically take care of your children?
Does this person live nearby? If not, would they consider relocating or taking your children in?
Does this person have stable finances?
Does this person have long-lasting relationships and a normal lifestyle?
Will this person be able to provide emotional support for your children in addition to everything else?
Will this person be capable of giving your children the life you want for them?
As you sift through your list of friends and family, it could be challenging to determine who would be the best guardian. This is especially true when you consider future scenarios, which is why it may be a good idea to list a secondary guardian should the first one be unavailable should an unfortunate event occur.
Regardless, choosing a guardian now can offer you some peace of mind knowing that if something were to happen, your children would be raised by someone you all love and trust.
Will You Be Creating a Trust?
Every estate plan involves writing a will to dictate how you want your affairs handled. However, they don’t always include trusts. Trusts, although optional, are an essential element of your estate planning to consider—especially when you have children.
A trust is a fiduciary agreement that specifically handles the transfer of certain assets from you to a beneficiary or beneficiaries. There are several ways you can arrange a trust. Still, the entire point of establishing one is to provide legal protection for the assets in question to ensure they’re distributed accordingly while reducing estate taxes and time in probate court.
By establishing a trust for your assets, whether it be your family home, money, or other things, you can ensure that these things are directly passed to your children should an unfortunate event occur. Of course, the time and monetary amounts these assets are disbursed will be up to you and overseen by an executor of your choosing.
It should be noted that the guardian of your children won’t be able to automatically use any inheritance money to care for your children. The state is in charge of this by default until the children are legal age. So, suppose you’d like to ensure that your children are cared for financially for as long as possible. In that case, it’s a good idea to set up an inheritance through a trust.
Lastly, in terms of establishing a trust for young children, the most popular option is a revocable trust. A revocable trust allows you to modify the terms or even terminate the document at any time while you’re still alive. That means you retain your rights to your assets until your time of passing.
However, unlike a typical will, a revocable trust still automatically passes your assets directly to your named beneficiary. Therefore, the assets you put in a revocable trust cannot legally be governed by your will or probate court.
Do You Have Life Insurance?
If you have young children, then life insurance is a must. This is especially true if you aren’t currently prepared to leave behind enough money that’ll financially support them throughout their college years.
A life insurance payout can provide the financial security necessary for them to receive the proper care and things they’ll need as they grow up and serve as a way to fund their education.
More importantly, life insurance is considered “payable on death,” which means it’s not a part of your will and doesn’t have to be put into a trust. Instead, it goes directly to your beneficiaries or into an account for the guardian of your children to care for them.
There are plenty of different life insurance plans out there to suit all sorts of needs. But, of course, you’ll want to choose the one that works best for you and your family.
Who Will Be in Charge of Your Other Assets?
Your children probably won’t be the only people you’re considering in terms of all your assets.
You may have certain assets such as cars or other properties that you’d rather have sold off to contribute to your children’s financial security. Or, you may want some assets to go to siblings or close friends.
Therefore, not only should you write out a will and likely a few trusts, but you’ll want to appoint someone you can trust to act as the executor of those documents. This person will ensure that all of your affairs after the fact are in order, debts are paid, and assets are distributed according to your last wishes.
Who Will Be in Charge Should You Become Incapacitated?
Remember that planning for your estate isn’t always about planning for the end. It’s just as essential to ensure that your assets and affairs will be taken care of should you become sick or injured and unable to maintain those responsibilities yourself.
That’s why you’ll also want to write up a health care directive that includes a durable power of attorney (DPOA) to ensure you have someone there to manage your care and other affairs when you’re not able to.
If you’re married, your spouse will be able to legally make certain medical decisions on your behalf. However, it’s still essential to have a directive to serve as a plan for those tough decision-making times to alleviate stress.
Your appointed DPOA will be limited in terms of your medical decisions unless otherwise stated. There are also different types of power of attorney to consider, which your Huntsville attorney will likely explain to you in great detail.
What Happens to Your Children if You Don’t Have an Estate Plan?
If you pass away without an estate plan, it’s referred to as dying intestate. When this happens, your entire estate will have to pass through probate court to be distributed accordingly with the Alabama Intestate Succession Laws.
Probate court is often a lengthy and costly procedure, and it could mean that your children don’t end up receiving the necessary financial support they need from your estate.
More importantly, it will be up to a judge to appoint a guardian for your children in family court. Your children will first be assigned a temporary guardian followed by a later hearing to determine who will receive full guardianship. This could cause many issues in regards to family or friends battling over custody arrangements.
It could also mean that your children end up in foster care temporarily or permanently until they become legal age.
When you’ve got young children, estate planning in Huntsville, AL, is that much more important. So, take the time to put your family first and get in touch with us today to speak with Sarah S. Shepard or another experienced Huntsville attorney so we can help take the pain out of planning for the worst.