Many people think estate plans are just for the elderly or the terminally ill. But this is a costly myth! Everyone needs an estate plan, and the best time to start thinking about your estate is early in life – as you progress through major milestones like marriage, buying a house, and having children.
If you have minor children, an estate plan can help you arrange guardianship, plan for their future, and ensure your assets are distributed according to your wishes.
Let’s take a look at the top 4 estate planning tips for parents of small children:
Determine who will take care of your children if the worst occurs. Choosing a guardian can give you peace of mind knowing that is something were to happen to you or your spouse, your children would be raised by the person of your choosing.
Secure Life Insurance
If something were to happen to you and your spouse, your debts will need to be paid and your children will need financial security. At a minimum, make sure you have enough life insurance to cover your debts, including your funeral expenses, mortgage, and any outstanding loans. Then, think about how much money your children will need as they grow up. Do you want to provide some funding for a college education? Carefully consider how much life insurance you will need in order to give your children the life you want for them.
Create Powers of Attorney and Healthcare Directives
Naming a Power of Attorney that you trust will ensure your affairs are handled even if you are incapacitated. Many people designate their spouse as Power of Attorney, but you should also have back-ups in mind, in case something happens to your spouse. Additionally, if your children are about to leave for college – you should create a Power of Attorney for them as well. This way, if something happens to them outside of the home, you can promptly step in to make healthcare decisions and manage their affairs as needed.
Consider the Advantages of a Trust
A Trust is an estate planning tool that is especially beneficial for parents of minor children. If something happens to you, chances are you do not want your children to receive a lump sum payout as soon as they turn 18. A Trust enables you to specify how and when to distribute an estate’s assets to your children – giving you more control over the outcome of your estate.