Many people think of estate planning as something you do as you get older, perhaps putting it off until they begin to seriously think about retirement. The truth is that estate planning should start much younger. As responsible new parents, there is no better time to plan for the future then when you are entering this new exciting phase of life. The following are a few things to consider as you plan.
How will your family earn income if something happens?
The main concern is typically for the primary income earner in the family. It's a good idea to purchase a life insurance policy that could replace their income for at least a couple of years, or until the remaining parent could realistically recover and begin generating an income. The non-earner or lesser earner should also have a small policy. Why? If something were to happen to them, you may have to invest in daycare, house cleaning, or other services to replace their contribution to the family. You will also need to pay for final arrangements and possibly lost income if you can't return to work immediately.
Who will be your beneficiaries?
In most instances, your spouse will be your beneficiary, followed by your children. In the event something happens to both you and your spouse, you will then need to have your children appointed to benefit under a trust, at least until they turn 18. You will then need to appoint a trustee, which can be a member of your legal estate planning team or it can be a close friend or family member. Retirement plans, insurance, and investment accounts will all require a beneficiary, so chances are this is something you need to worry about even if you only have minimal assets.
Where will the children go?
You probably figure that your spouse will raise your kids, but what about if something happens to both of you? This is why it is important to have a will in place and to clearly state the order of succession for your children's guardians in the event of you and your spouse's passing. Discuss this with the person that you plan to appoint as guardian so that they are prepared for the responsibility – you don't want to foist guardianship on someone that hasn't previously agreed. Many people choose a family member, but you can also appoint someone from outside of the family if desired.
Contact an estate planner if you need more help.
Share17 November 2016
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