People usually don’t create estate plans for their own edification. Instead, their main priority is often to protect their loved ones. Married couples may establish estate plans to protect one another. Once they have children, the need for an estate plan increases significantly.
Children are vulnerable and depend entirely on their parents for financial and practical support. Should anything happen to the parents in a family, the children may end up in a very precarious situation without advance planning. New parents often decide to establish estate plans for the protection of their children.
What issues do new parents usually need to address when they create their estate plans?
Selecting a guardian
Children who lose their parents may end up in state facilities or foster care. Parents can protect their children from that situation by choosing a guardian ahead of time. Parents can name a guardian in their wills and may even nominate an alternate candidate in case their first option is unavailable for some reason. A guardian can help care for and support the children until they become legal adults.
Providing financial support
Parents with young children need to think about the long-term financial support of their dependents. Children have a right to inherit from a parent’s estate, but they cannot legally control their inheritance until they become adults. Parents may want to consider establishing each trust, especially if they have significant resources to pass to their children. A trust can help protect assets for the children until they are old enough to legally control those resources.
Preparing for sudden emergencies
Parents may need to include living documents in their estate plans. They may want to name someone who can manage their health care choices and finances other than their spouses. That way, there is a trustworthy individual to maintain family circumstances in emergency situations. If both parents end up incapacitated in the hospital after a car crash or a house fire, advance directives and powers of attorney can help protect the family unit.
Establishing an estate plan is an important decision for new parents. The right documents can help protect the entire family in a tragic or challenging situation.