CALLING ALL NEW PARENTS: DO YOU HAVE AN ESTATE PLAN?

And…hello grandparents! I can guarantee that if your adult child saw this article, their eyes glazed over and they moved on. But that is ok. Young parents tend to believe that estate planning is for old people. So grandparents, next time you talk to your adult child, gently ask if they have started thinking about an estate plan. And, “hello” to all young parents that took a big gulp of coffee for that caffeine surge before diving into this article.

Life Insurance

Many young parents tend to think that they don’t need life insurance because they are young, healthy and are not going to die anytime soon. Yes, we hope that is true. But if the worst happens, will your children be ok? Can they live without your salary? Will your family be able to pay the rent or mortgage payments? Will there be enough money to hire a babysitter to help out?

Also, good news: if you buy a policy when you are young, it is significantly cheaper! We recommend a term life insurance policy. If you should die when your children are young, the proceeds of this life insurance policy will be transferred into a “trust” that will be managed by a “trustee” and can be used to care for your children and family.

Choosing a Guardian

Many young parents also don’t realize that an estate plan is used to appoint a guardian for your children if you pass away while your children are minors. This decision is possibly the most important estate planning decision you will make. If you already know exactly who want the guardian to be…great! Time to write it down and make it official and avoid a lengthy court process following your death. But for the rest of you, here are some things that you may want to think about:

a) Where does this potential guardian live? Will your children have to change schools, neighborhoods or states to go live with their guardian? 

b) Does this potential guardian have the same religious, moral and general parenting beliefs as you?

c) Is this potential guardian interested in raising your children as his or her own if something happens to you?

Children’s Access to the Estate

If something happens to you and your significant other when your children are young, at what age do you want them to have access to your estate (i.e. savings accounts, retirement accounts, life insurance proceeds)? Some parents appoint a trustee to manage the estate until the children are well into adulthood. Other people distribute assets once the children have completed college or have a trade. There is no right answer, but this estate plan will help your family carry out your wishes when you are gone.  

Creating an estate plan can be daunting. It is tough to think about death. There are lots of questions that must be answered to create a comprehensive estate plan. If these questions are left unanswered at your death, someone else will make the decisions and in many instances it will be the court system. This is completely unnecessary and not in the best interest of either you or your family. 

An estate planning professional can make the process easy and you will have peace of mind knowing that your family’s affairs are in order.

If you would like to discuss establishing an estate plan for your family, I see people every day for a FREE 30 minute consultation in Walnut Creek and Brentwood.

This article provides only general legal information, and not specific legal advice. Information contained is not a substitute for a personal consultation with an attorney.  LAW OFFICE OF JOAN M. GRIMES, PHONE (925) 939-1680 1600 S. Main Street, Suite 100, Walnut Creek, CA 94513  © 2015 Joan Grimes