If you thought estate planning was just for grandparents, think again. Families with young children should have an estate plan. In fact, they should start working on their estate plan as soon as they know they’ll be welcoming a new member into the family. A recent article from Chronogram, “Why Estate Planning Is Important for Young Families,” explains why this is critical to protecting children.
Without a will, the court will make all kinds of decisions about the children’s lives, from who will raise them to how their living expenses will be paid. The decisions may not be what the parents would have wanted. Family members will still need to undertake expensive and stressful litigation if they want to go against the court’s recommendations.
The Last Will and Testament is used to distribute assets after the owner dies, including the primary residence, bank and investment accounts and personal property. Without a will, the state law determines what happens to the property. Let’s say someone dies with a spouse and young children. In some states, the spouse automatically receives the first $50,000 in value. The rest is divided equally between the surviving spouse and all children.
What happens if the children aren’t old enough to inherit property? Minors are not legally permitted to receive property, including ownership interest in real estate. If there is no will, the court appoints a guardian for the child. This can lead to unnecessary costs and delays in managing the ownership of the home. Having a will where each spouse leaves their property to the surviving spouse prevents this situation.
Wills are also used to appoint guardians to take care of children in the event both parents pass away. Guardianship refers to the person who will raise the children, which is different than managing the financial assets for the children’s living expenses. Parents are often advised to name a person other than the guardian to handle support for the children. Proceeds from life insurance policies, investment accounts, etc., may be better managed by a second person. A trust may need to be created and funded for these assets.
The role of the executor is especially important where minor children are involved. An executor overseeing the management of an estate when small children are involved needs a different mindset than someone distributing assets after the death of elderly parents. Another reason parents of young children must have a will and name a responsible executor is to protect the children’s futures by making sure that resources needed for the children’s support aren’t squandered because of family fights over the estate.
An experienced estate planning attorney can craft an estate plan to fit the family’s needs and protect the surviving spouse and children. There’s no need to leave the decisions up to a court when having a will and related estate planning documents can be prepared to protect the family.
Reference: Chronogram (Sep. 10, 2024) “Why Estate Planning Is Important for Young Families”