Most young parents have no thoughts of dying or becoming seriously ill or injured. As unlikely as such a serious event is when we are young, it is a possibility. This is why we pay for medical insurance, disability insurance, and life insurance.
Even though many young parents acknowledge the possibility of a life-altering event by maintaining insurance policies, a much smaller number of young parents have estate plans addressing what should happen if these situations occur. An estate plan ensures your wishes will be carried out, including who will care for your minor children and how your assets will be distributed.
Planning for Disability
In the unlikely event you can’t make or communicate financial and health care decisions, you’ll need to have people you trust to make them for you. Most people name their spouse as the person they want to make decisions for them. It’s a good idea to name at least one backup person in case your spouse is also incapacitated.
Appointing people as your agent to make decisions on your behalf requires creating and executing two powers of attorney, one for financial decisions and one for health care decisions. Depending on where you live, these documents have slightly different names, but they are used for the same purpose across the country.
In your health care power of attorney, you can also specify which medical treatments you want or don’t want if you are terminally ill. In your financial power of attorney, you can give your agent the ability to manage all your financial matters or just certain issues.
Choosing a Guardian for Minor Children
If you were to die or become seriously ill, your spouse would continue to care for your children. However, if your spouse were also unable to care for your children, then someone else would need to care for them. This person is referred to as a guardian. If you and your spouse don’t name a guardian in your wills, then a judge decides who will have custody of your children. Most people would rather choose who has custody of their children than rely on the court.
Give careful thought to who will raise your children. Think about whether they will still be able to attend the same schools and participate in their usual activities. You may want to make sure your children’s guardian will raise them with values the same or similar to your own.
Choosing a Conservator for Minor Children
A conservator manages another person’s finances when it would be unwise for them to have the responsibility, such as a minor child or someone with dementia. Some parents choose their children’s guardian to also act as their conservator, while others choose a different person.
Same as with a guardian, if a conservator is not selected, a judge will decide. You can name a conservator in your will. However, if you want to lay out more definite instructions as to how and when your children inherit your assets, you should consider creating a trust for their benefit.
Wills and Trusts
Having a valid will ensures your wishes concerning the distribution of your assets and guardianship of your children are followed after you are gone. In your will, you name the person you want to distribute your estate to your creditors and beneficiaries. You can also name a guardian and conservator for your minor children.
Trusts are usually more involved than wills. They allow your estate to bypass the probate process, making the distribution of your assets faster and private. If a person dies with only a will or no will, then their estate must pass through the public court system. Creating a trust also makes it easier to dictate how your assets will be distributed. When developing a thorough estate plan, a trust is an important tool in addition to a will.
Starting the Estate Planning Process
Having an estate plan is important for everyone, especially parents with minor children. Think carefully about who will make decisions for you if you are unable to, who will be the guardian for your minor children, and how you want your assets distributed. Viewing estate planning as an ongoing process rather than a one-time event is helpful. You should revisit your estate plan every few years to make sure it’s still in line with your wishes. An experienced estate planning attorney can guide you through the estate planning process so that you can rest easy knowing that you have a solid plan. Contact our Chicago area office at 630-568-6656 today to start your estate planning process. We look forward to the opportunity to work with you.
This article offers a summary of aspects of estate planning. It is not legal advice and does not create an attorney-client relationship. For legal advice, you should contact an attorney.