Tips for Updating Your Estate Plan When You Have Children
Everyone should update their estate plans at various points in their lives, such as when they get married or divorced or when their financial situation changes substantially. One of the most important times to update your estate plan is when you have children, as planning for children is one of the most important aspects of your legacy. Not only can a strong estate plan provide financial support for your children in the event of your death or incapacitation, but it can also allow you to name a guardian for your children’s care. While there is no such thing as a “one size fits all” estate plan, some estate planning tools are more common for new parents than others. If you are a new parent, a Branson estate planning lawyer can help you create the ideal estate plan for your family.
Name a Guardian in Your Will
A last will and testament is one of the most important tools in any estate planning arsenal. While there are a number of drawbacks associated with wills, including that assets passed through them must go through the probate process, they also offer a number of advantages. One of the primary advantages of a will is that it allows you to name a guardian for your children in the event that you and the children’s other parent die or become incapacitated at the same time.
When choosing a guardian for your children, consider the following factors:
- Age: A guardian should be of an appropriate age and stage of life to properly care for your children. In some cases, it may make sense to appoint a grandparent as a guardian, although in other cases a grandparent may be too old to care for children into adulthood.
- Location: The location where a child grows up can have an outsized influence on their later life. When choosing a guardian, consider whether the potential guardian’s neighborhood, school system and proximity to nearby relatives.
- Relationship: The most logical choice of a guardian is often a close family member, but blood relation is not a requirement to serve as a guardian. Nonetheless, it is best to choose a guardian with whom your children already have a relationship so as to ease the transition into the guardianship.
- Responsibility: Serving as a guardian is an enormous responsibility. When choosing a guardian, consider the potential guardian’s maturity, parenting habits, and financial responsibility.
- Willingness: Before naming a guardian in your will, be sure to speak to each potential guardian to obtain their consent and ensure that you and the potential guardian are on the same page about what raising your child will look like.
For more information about executing a will or choosing a guardian, please contact a Branson estate planning lawyer.
Obtain a Life Insurance Policy
It is uncommon for most new parents to have the assets on hand to fully provide for their children’s financial future at the time they make their estate plans. And while a guardian may be able to assist, you should not assume that your chosen guardian will be able to provide for your children in the manner you wish. One of the easiest ways to secure your children’s financial future is to obtain a life insurance policy that will provide sufficient coverage after your death. However, it is generally unwise to name minor children as beneficiaries of your life insurance policy. Instead, name your spouse as the primary beneficiary and a trust as the secondary/contingent beneficiary (more on this below).
Establish a Trust for Your Children
One of the most important things you can do for your children is to establish a trust for the assets you plan to leave to them. This can be either a revocable trust or an irrevocable trust. Typically, parents who establish trust funds for their children name themselves as the trustees and name successor trustees to take over management of the trust in the event of the trustees’ deaths. Alternatively, you may choose to establish a testamentary trust as part of your will, which only becomes effective at your death.
There are several reasons why trusts are an attractive option for parents wishing to provide for their children, including:
- Flexibility: With a revocable trust, the trust maker can make changes to the trust’s terms as circumstances dictate
- Control: Missouri estate law allows trust makers fairly broad discretion when setting the terms of the trust. For example, the trust maker could specify that, in the event of the death of the original trustees, the successor trustee will make distributions to the beneficiaries only at certain ages or for certain costs.
- Diversity of assets: Trusts are capable of holding a wide range of assets, including life insurance proceeds
- Avoidance of probate: Assets passed through a trust do not go through the probate process, thereby saving the trustees and beneficiaries time and money
Speak to a Branson estate planning lawyer for more information about the best way to establish a trust for your children.
Execute a Durable Power of Attorney
Power of attorney allows a person you choose (your “agent”) to make financial and medical decisions on your behalf in the event that you become incapacitated. While power of attorney is not necessarily strictly child-focused, in most cases agents with power of attorney have the authority to make day-to-day financial decisions, including financial decisions related to your family. It is therefore important when choosing an agent to consider the potential agent’s soundness of judgment and financial responsibility.
Plan for Your Children’s Future With Help From a Branson Estate Planning Lawyer
The birth of a child is one of the most critical times to ensure that your estate plan adequately reflects your wishes and provides for your new family members. An experienced attorney can help you craft an individualized estate plan that is uniquely designed to care for your family. For more information, please contact a Branson estate planning lawyer at LifeGen Law Group by calling 417-823-9898 or using our online contact form.