You’re a new parent. Death should be the last thing you want to think about, right? Not so quick. With thousands of people dying of unnatural and unplanned causes, the importance of estate planning should take on sudden urgency. You want to provide—at least financially—for the unlikely event that you pass from this earth in an unfortunate gardening accident.
You probably have a passing familiarity with the documents in question: wills, trusts, healthcare directives, funeral planning. Not to be morbid about the whole thing, but do you want a complete stranger making these sorts of decisions for your children? Here’s what you need to do.
It’s not complicated, but it does require action rather than simply reading through this article and going, “Hmm, that’s nice.”
What is Estate Planning?
Almost everyone who passes from this earth needs some sort of estate planning. Though most people embrace the concept of setting up legal entities and instructions for how to dispose of your assets in the event of your death, a disturbingly high number don’t follow through and actually do it.
From a scribbled note signed in front of a witness to hiring a will and estate lawyer to create a library of official documents, estate planning can take many different forms. The bottom line is that it needs to take some form if you want to have any say in matters related to your assets and children should you die early.
Making a Will
If you do nothing else, creating a will is the single most critical proactive document to consider. You can take care of a lot of legalities within a will.
This is where you should name a guardian for minor children so some random, uncaring judge doesn’t have to do it. If the distribution of your assets is a straightforward matter, a will is a perfectly legitimate avenue in which to do it. Maybe a simple “Everything to little Johnny when he turns eighteen” will suffice.
You should also name an executor for your will, as well as someone to manage the assets until the child is old enough.
Trust Accounts are a Good Idea
If you have investments, real estate, collectibles, or any of a dozen other forms of assets, including cash, consider leaving money in trust for your children until they are old enough to manage it themselves.
There are solid benefits to a trust. Beneficiaries can expect to pay less in taxes on assets shielded inside a trust. This arrangement also allows your estate to skip the probate process.
In case you aren’t aware, probate can turn into an absolute disaster that benefits no one except the court system. It can be an unwieldy, uncaring, lurching, inefficient process liable to yield exactly what you wouldn’t want. Why? Who knows? It’s a bureaucratic creation, and those tend to work well none of the time.
Since most people find it difficult to manage their affairs from beyond the grave, it’s a good idea to pick an executor for your estate before you die. (That means as soon as possible because you have no idea when that fateful moment will arrive.)
An executor should be a person you trust to carry out your will, supervise the probate process if it comes to that, and pay off creditors and any taxes owed. Obviously, this should be an individual willing to take on the responsibility of closing out your worldly affairs.
Powers of Attorney
An important part of estate planning is setting up a durable power of attorney and medical power of attorney.The former is a person you designate to manage your financial affairs in the event you become incapacitated. The latter is empowered to make healthcare decisions in the same situation and see that your wishes related to staying alive (or not) by artificial means are adhered to.
While you could choose the same person to take on both roles, be aware that, legally, it involves two separate documents.
When is the Right Time to Plan Your Estate?
If you haven’t planned your estate and you’re reading this, the answer to the question is As Soon As Possible!
At the very least you should create a will, designate a guardian for minor children, and name an executor for your estate when you find out your first child is on the way.
By the time the little tyke is born, these essentials should be in place because you could fall into an open manhole and never be heard from again on the way home from the hospital—hopefully, your spouse will be holding the new child in this event.
Other actions like naming powers of attorney and making funeral arrangements are important, though can be completed after the will/guardian/executor trifecta is done.
The Bottom Line
It’s not too much of a reach to say that estate planning is one of the most important things you will do while still among the living. It will probably make your surviving spouse or child’s life easier, and who wouldn’t want that?
If the whole thing seems too overwhelming, visit an estate planning lawyer. A good one will be able to guide you through the process with a minimum of angst. Perhaps best of all, that niggle of doubt perched in your brain that tells you there’s something important you need to tend to can quit worrying about what will happen to your stuff when you’re gone.
Have you written a will and chosen guardians for your children? What advice would you share?
Riya is the mother of a young boy. She is also a content writer, writing in several areas of expertise including home & family, business management, lifestyle and travel.