If you’re caught in the hustle and bustle of small children, then estate planning for young families is probably not the first thing on your mind. You’re not planning to die anytime soon, and anyway, having too much to do being tired is what concerns you at the moment. You may also think that estate planning sounds like something that’s too expensive given the budget is already stretched tight. However, the truth is that estate planning for young families is vitally important, and in fact, those young children should be more the reason to think about your estate plan.
First, one of the most important things that you can do is to name a guardian for your child/ren. If you were to pass away, then the guardian will be the person who will care for your child/ren until they are 18. Although thinking about your own death is not a pleasant task, this is a huge decision, and one that should not be made lightly. It should be someone that you trust and believe will do a good job for caring for your child. In most cases, parents choose their own parents or siblings to care for the child. It’s important to choose someone who will be around for the duration of your child’s life and be able to give high quality care. You may also think about naming a second guardian if the first guardian is not able to serve.
Another important thing to consider in estate planning for young families is the financial support you will provide for your child/ren. If you and your partner were to pass away before your child is an adult, you’ll need to make arrangements for the transfer of your assets. It can be a good idea to set up a testamentary discretionary trust that will handle the assets for your child/ren. Testamentary discretionary trusts are great estate planning tools because they can offer tax minimisation, asset protection and flexibility. A testamentary discretionary trust is a type of trust created under a will, comes into existence only upon the administration of the deceased estate and has four elements: the trustee(s), the assets, the beneficiaries and the discretion.
However, some parents follow a slightly different path. Some parents set someone in charge of handling their assets and give them the responsibility as deemed fit for the child. Whatever you decide to do, it must be documented. That’s why estate planning for young families is so important.
Steps to Estate Planning for Young Families
- Write a will
For many young parents, while writing a will is important for outlining your assets, it is also important for deciding what will happen with your kids when you pass away. When you write your will, you should name a guardian for your children. If you do not make your wishes clear when you write your will, then the court will have to appoint someone they believe will be able to do the job of taking care of your kids. This can be someone you don’t want taking care of your children.
Don’t be tempted by a free or cheap DIY will kit. The law surrounding wills and estates is complex, and we always recommend that you seek legal advice to ensure you haven’t left any loopholes.
- Life insurance
Life insurance is the best way to ensure your family who is left behind will be taken care of. If you or the other parent were to pass away, you would have the life insurance money to fall back on to repay debt or provide cash for your family for a few years. You may never know how long it can take for you and your family to get back on their feet – especially if your children are young and entering the workforce is difficult for the parent left behind.
- Power of Attorney
While you are young, the thought of ageing is far from your mind, but illness and accidents do happen. A power of attorney is a document that allows someone else to make decisions for you in the event that you have lost the capacity to make your own decisions. Usually, you will name your spouse, but it should always be someone you trust. If you do not name a power of attorney, people may make decisions that may not follow your decisions.
Estate planning for young families is complex and while you may have the best intentions, you may not know how to provide for them adequately. That’s where we can help. Our friendly, experienced team can give you total peace of mind. Contact us today.