Having children complicates life in many interesting ways, and estate planning is no exception. Young parents don’t need anything fancy, but there are a few things you should definitely think about.
Five Steps To Take To Protect The Financial Future Of Your Children
Step #1 - Who will be the guardian of your minor children?
One of the first decisions young parents must make is deciding who will take care of their minor children. Estate planning will help reduce this discussion to writing. By creating a will or trust, a young family can determine who will care for their minor children if something unfortunate should happen to both parents.
If young families do not plan for these circumstances, the courts will determine which family member or friend will care for the minor children. By naming a guardian in their wills, parents can avoid this mistake. The estate plan will designate a person to raise their minor children in a manner that is acceptable to both parents and avoid family conflicts over the care of the minor children.
Step #2 - How will your property be managed?
For young families it is important to designate someone to manage the assets of the estate. If the estate plan does not detail how the assets should be managed for the minor children, the courts will be forced to act. This can lead to expenses that can be avoided with estate planning. A common solution is to leave the assets to a testamentary trust.
A testamentary trust establishes a trust for minor children that is created within a will. The will designates a trustee to manage the assets for the benefit of the children. Once the children reach a certain age the assets remaining in the trust can be fully distributed to the children.
Step #3 - Who will get your personal possessions?
For young families without a large amount of assets this may make estate planning seem not worth the time or effort. However, in the absence of an estate plan, the disposition of personal possessions will be determined by South Dakota law.
Step #4 - Who is responsible for managing your estate?
Every young family has numerous monthly responsibilities. For instance, someone needs to be designated to close bank accounts, pay bills, and administer the estate. A will can expand the powers granted to the personal representative so that he or she can complete the estate in the most efficient manner.
Step #5 - Who will handle your health care and financial decisions?
One area of estate planning that is often overlooked is naming a person to make health care and financial decisions. Of course, if a young couple is married, the most likely person will be the spouse. However, if the young couple is in an accident together who will make sure the bills are paid and health care directives are followed? Young families should remember that estate planning involves creating a power of attorney for health care decisions and financial decisions.