When parents of young children come talk to us about creating an estate plan, we walk them through the various ways that creating a plan can protect their children. Whether you are a new parent, an expecting parent, or already have one or more young children, creating an estate plan as soon as possible is absolutely essential. Without a comprehensive estate plan in place you leave a variety of unanswered questions that directly affect the potential safety and well-being of your children. To help better explain why and how an estate plan protects young children, let’s take a look at some key issues.
Protecting Children Through Inheritances
One of the most important ways that an estate plan protects a young child is that it allows the parents to leave the child an inheritance. The inheritance will be there to protect the child’s financial needs as he or she grows up, and can also be there to provide for the child after the child becomes an adult.
However, leaving inheritances to young child is significantly different than leaving inheritances to adult children. At the very least, an estate plan that leaves inheritances to young children will rely upon trusts to manage those inheritances until the children become old enough. Creating the right kind of trust that protects your child’s inheritance takes a lot of time, planning, and thought. For example, part of the process of creating the right trust will require you to select the right trustee to manage that trust, as well as decide how to distribute the inheritances to your children in the coming years.
Protecting Children Through Incapacity Planning
What happens to your children if you become incapacitated? Who will look after them? What if both you and your spouse become incapacitated at the same time? Will your parents, siblings, or other family members have the legal authority to make decisions on behalf of your child?
Without a comprehensive estate plan in place, these questions do not have any definitive answers. However, if you choose to make an estate plan, you can answer each of these questions in detail.
Protecting Your Children Through Guardianship Nomination
If the worst should happen and you and your child’s other parent die, who will become the new caregiver for your children? Who will have the legal authority to make decisions as the child’s legal guardian?
If you create an estate plan you get to choose who will become your child’s guardian should you die. Failing to make a plan will mean that a court will have to get involved and choose who it believes should be your child’s guardian.
Parman & Easterday