I’ve heard that parents with young children need estate planning. Is this true?
Estate planning has evolved in ways that genuinely benefit families with minor children. The focus is more on people, and less on things. (“Who do I want to protect if something happens to me” instead of “what do I want to give to someone after I’m gone.”)
There’s nothing more important than making sure our kids are safe and cared for. Having an estate plan can ensure your children will be cared for by the people you want handling their care, in the way you want them to be cared for — no matter what — in case the unthinkable should happen to you before your kids are old enough to be on their own.
Here are a few ways you can use estate planning to ensure your kids are always protected:
Establish a will that is legally valid.
Your will is where you name who should be legal guardians of your children in the event of your death. Without a will in place, permanent guardianship proceedings through the courts can be time-consuming, complicated and costly for your family. It can also be very stressful for your kids, especially if family members are fighting over who gets guardianship. Note that if you opt to establish a trust, your trust can include your will.
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Make additional guardian nominations outside your will.
By formally nominating long-term and short-term guardians outside your will, you can capture, in writing, your preferences for who will look after your kids in an emergency and also who will care for them in the event that you become incapacitated for a short while or a long period of time.
Establish a trust to provide additional protections for your kids.
You might want to consider a trust-based estate plan instead of a will-based estate plan, and you don’t have to have valuable assets or any savings to do this.
A trust-based estate plan can allow greater flexibility in planning for the life you would want your kids to have if you were gone. This could potentially bring you greater peace of mind.
Here are a few reasons you may want a trust-based estate plan instead of a will-based estate plan:
- Assets can be distributed to your family more quickly than under a will-based estate plan. Under a will, court approval is needed before assets can be accessed or distributed. When your assets are held in a trust instead, court approval is not mandatory ahead of asset distribution.
- Privacy is maintained to a higher degree under a trust-based plan. Under a will-based plan, your will gets filed publicly when you die. Anyone can access your will to see who the beneficiaries are, what they are getting and how they can be contacted. This includes the names of your minor children and details about their inheritance. When your assets are held in a trust, this public filing is not required.
- Life insurance proceeds that go to the trust can be used to care for your kids. You can include detailed instructions about what you want life insurance money to be used for and how you want your kids to be cared for. Insurance companies cannot give life insurance payouts directly to minor children. Naming your trust as beneficiary is a way to ensure it can be used for their care while they are growing up.
Barbara Johnson, Esq. is an estate planning attorney and the founding attorney of Plan And Protect Law Firm located in Irvine, and serving clients throughout Southern California. For additional information about estate planning, visit planandprotectlawfirm.com.