3 Critical Questions about Estate Planning that Every Parent Should Ask Themselves
by Samantha Sprague, Attorney
CONGRATULATIONS! Becoming a parent is an amazing experience. One thing you should be accustomed to by now is asking questions. Sometimes you get a lot of ‘answers’ to questions you may not have even known to ask.
Whether you’re brand new to the parenting gig, or have several years under your belt, below are 3 common questions that every parent should consider.
1. What happens if I can’t make my own choices?
Self-care is important, to your sanity and to your health, and sets an important example for your little one. I meet with a number of parents who come in with the primary goal of taking care of their kids.
It doesn’t matter if the kids are 2, 22 or 55 – every good parent wants to make sure their kids are protected. However, the first thing any parenting book will preach is to make sure you take care of yourself.
Estate Planning is no different. Even before you bring your bundle of joy into the world, there are two documents you should have in place: (1) Healthcare Power of Attorney and (2) Financial Power of Attorney. This is the entry level of protection to make sure that if something awful occurs (e.g. car accident, stroke, medical procedure, etc.) you know who will be managing your assets and making medical decisions for you.
This is something that you should have in order before your little one arrives, but if they’re already here, there’s no time like the present to get started.
2. Who is going to take care of my child if I can’t?
No one person is invincible. You need a backup plan in case life goes drastically wrong and you are no longer able to care for your children.
What happens if you die?
Some people leave it up to chance and rely on the probate courts to pick someone to raise their kids. Generally, the courts will give preference to family members, but there are a lot of factors that are taken into account for something called “Judicial Discretion.”
Judicial Discretion means that where your kids end up is entirely in the hands of the probate judge, a person who has never met you, does not know your family, and is unaware of your wishes.
What can you do?
Every parent – regardless of how much money they have in the bank or what they own – should have a will. A will is where parents get to determine who is going to raise their kids if they cannot.
If a parent has guardianship and conservatorship language within their will, they get to choose who their child will live with and who will manage the stuff they leave behind for their child.
This does not eliminate parental rights if your child still has a surviving parent. However, if both parents should die or be incapacitated, the testamentary wishes (Will) outlined by the parents serve as guidance for the court.
There are other considerations that should be addressed with blended families, step-parent’s rights, and same-sex parents.
Each situation is unique and you should consult with an attorney on what your legal rights are and how you can make sure you are putting the right documents in place to provide surety that you decide who raises your kids.
3. How do I protect my kids with my Estate Planning?
As parents, we are hardwired to look out for our kids, to protect them, and to teach them to protect themselves when they are able to.
However, everyone approaches parenting a little differently.
There are helicopter parents trying to ‘bunk’ with their college-aged kiddo, and then there are those employing the sink-or-swim method my grandpa used to teach my mom how to swim in Lake Erie.
With your estate plan, you can put ‘safeguards’ in place for minor children, so the assets you leave are protected both FOR them and FROM them until they learn how to manage the money.
One way to ensure that anything you leave is protected is to create a Revocable Living Trust. This is a document that can be modified as your family grows and requires different types of protection.
A common practice within trusts is to put age restrictions in place. When you have multiple children of different ages you can ensure that minor children receive what they need while still allowing for a fair distribution.
If you are like many young parents, you may find that you are worth more dead than alive due to the low cost of life insurance. Making a trust the beneficiary of life insurance policies can ensure the money is protected for your kids.
There are numerous options for protecting assets for your kids. However, whatever you decide to put in place, it is important to remember that as your life changes and your kids grow, you should plan to update your documents. We recommend annual or semi-annual reviews to make sure your documents evolve along with your family.