Even when you’re young, childless, and don’t have many assets, you need to do some basic estate planning. But estate planning takes on a new urgency when you become a parent. It’s essential to spell out who you’d want to care for your children if you’re gone and also to provide for their financial security.
Here are three estate-planning documents parents should consider. Ideally, you’d work with an experienced attorney to draft these documents. However, some legal websites allow you to use a do-it-yourself estate plan for a minimal cost.
But that can be a problem if you have substantial assets. You may not want an 18-year-old coming into a lot of money at once. A revocable living trust is like a will in that you can use it to specify who gets your property. But it allows you to be more specific about how you want your property to be distributed.
Most people who create a revocable living trust serve as the trustee. They will manage the assets in the trust while they’re still alive and then name a successor trustee to take over when they die or become incapacitated.
You can use a trust to make sure your child receives their inheritance over an extended period vs. all at once on their 18th birthday. Or you could make distributions contingent on your kid completing their education.
A financial power of attorney is a document that lets you name someone to manage your finances if you become incapacitated. It’s especially important that parents have this document so that someone has access to their bank accounts and can pay bills, if necessary.
Without a financial power of attorney, getting this access will typically require a court order. You’ll want to make sure money is available for your kids’ expenses with minimal delays in an emergency.
Once you become a parent, buying life insurance is absolutely vital. Term life insurance policies, which only pay a benefit if you die within a specified period, are usually quite affordable. For example, a 35-year-old non-smoker in good health can generally obtain a 30-year $500,000 policy for less than $50 a month.
No one likes to think about their own mortality. But when you have children, preparing for the worst is something you can’t afford to put off.
The information contained on this website is presented for informational and marketing purposes only and is not to be understood as legal advice. You should consult an attorney for advice respecting your individual needs. Renee E. Nesbit, Attorney at Law looks forward to speaking with you about your particular needs. Please note, however, that the mere act of contacting our firm does not create an attorney-client relationship. As a result, you should never send any confidential information to our office until a Representation Agreement has been signed by both you and Renee E. Nesbit, Attorney at Law.