It is common for people to assume that an estate plan is not essential until they have a considerable fortune. If you have a minor child, you must have an estate plan, irrespective of the size of your estate assets. Since your child is your most important asset. According to a recent study, only 36 percent of parents with children under 18 have a will.
An estate plan is a good idea for anybody, regardless of their financial or personal condition. But for families with children, it is vitally important.
To keep their children safe, parents should implement the following measures:
1. Choosing a Guardian
If both parents die at once, who is going to take care of the children if they are not above 18 years of age? The easiest way to demonstrate who can take control of the children is to name that person as a guardian in their will.
If parents are looking for a guardian for their children. They should consider the location of the guardian’s house, their religious and cultural views, and their financial condition. When parents die, they should choose the same guardian in all their legal documents to avoid misunderstandings.
Guardianship of young children involves enormous responsibility. Thus, parents should make sure their desired guardian is prepared to look after the children in the case of a calamity.
2. Choose Your Children as the Secondary Beneficiaries of Your Estate
Your children should be included as secondary beneficiaries in case you both die at the same time. Your children will receive their quota of your life insurance and retirement savings. As well as other assets if both you and the primary beneficiary die at the same time. You might also include a tertiary beneficiary.
3. Consider Establishing a Trust Fund
If you die before your children reach the age of 18. Any inheritance you leave them cannot be directly controlled by them. It might lead to issues. In the event of your death, the court may nominate someone to administer your children’s inheritances.
Consider forming a trust if you wish to define who will control your assets. Like, how you will utilize your property and money for your children, and when your children will directly receive your wealth. It is possible to commit the property to the care of a trustee for your children’s trust and give specific instructions on how to handle the funds so that your children are well taken care of throughout their lives.
4. Having a Disability Plan in Place for Yourself
Accidents, sickness, or violence might leave either or both parents unable to care for their children. It would help if you also consider this. Both parents need a healthcare attorney to grant someone else (commonly known as a surrogate, healthcare agent, or proxy) legal permission to make decisions on their behalf if they can’t do it on their own.
In most cases, you will want to appoint your partner to this role, but you should also designate one or two backups if your spouse becomes incapacitated. Allow your medical professionals to share your health information by signing a Health Insurance Portability and Accountability Act (HIPAA) consent form.
This way, your medical records will be available to others such as siblings, parents, and close friends. Because disability income is not covered by life insurance, it is essential to look into disability income insurance.
Should All Children Receive the Same Benefits?
When Should You Assign Equal Amounts?
This means that every child will get one-third of their parent’s estate if there are three children. Because they have comparable requirements and are in an equivalent place in life. Because they received similar assistance from their parents in the past. It seems reasonable to give them all the same inheritance.
When Should You Assign Different Amounts?
It may not seem fair to give each child an equal share of the family’s possessions in every case. Perhaps one of your children is taking care of you, and you may feel like showing your appreciation or making up for the time and money you have missed as a result.
Or maybe you have contributed more wealth to one kid than another throughout your life, such as for a graduation degree, wedding, or a down payment on a house. It would be best to use equitable distribution in this situation instead of equality. If you have a disabled kid, you may choose to leave much of your wealth to that child’s care through a special needs trust.
An Estate Plan for Parents with Disabled Children
A special needs trust should always be considered when a parent makes estate preparations for a kid with special needs. Individuals with disabilities who already receive medical assistance, supplemental security income, or waiver benefits, or who may do so in the future, can use special needs trusts to preserve their financial resources, such as yearly gifts and inherited wealth.
Parents of a disabled child can leave assets directly to that child in their will. If the assets of that disabled child exceed $2,000, it will prevent the disabled child from receiving public assistance. Allowing the inheritance and yearly gifts to be put in a special needs trust as part of an estate plan. Will enable a disabled child to continue to receive public benefits. Since the trust is recognized as a different legal entity from the disabled person.
You can advise other family members like grandparents to solely give assets to a special needs trust for the disabled child.
By now, it should be evident that failing to prepare for all eventualities does a great deal of harm to our family. That is why meeting with an attorney specializing in estate planning is an essential first step in your preparations.
Having a well-thought-out, comprehensive, and long-lasting estate plan in place will protect you. As well as, your partner and your children in the case of a tragic incident.