Wednesday, August 2, 2017

New Parent Series Part V - Creating an Estate Plan

As a new parent, I imagine all of the things that my son will see and do as he grows up. Rarely do I think that I may not be around during all the wonderful milestones in life. For most people, planning for the time when you are not able to care for yourself or your family is something that you would rather not think about. Perhaps this is part of the reason why only 36% of parents with children under the age of 18 have a will according to Making your wishes known often provides people with peace of mind and will help your family know how to proceed. 

Creating an estate plan allows you to convey your wishes through the use of legal documents. These documents will speak for you regarding medical care for you and your children if you are unable to due to disability, what will be done with your finances, and how your estate should be distributed once you pass away. Additionally and perhaps most importantly for new parents, these documents allow you to name a guardian for your children. You are able to make amendments to your estate plan when needed as your family's needs generally change over time. The following are basic documents that should be included in a (new) parent's estate plan. 
  • A Basic Will. A Will makes sure that your assets are passed on according to your wishes and allows an individual with children to name Guardians. If an individual does not have a Will, the laws of the state will control the distribution of the estate and the courts will decide who will raise the children. To help avoid court proceedings known as probate, you may also consider a Declaration of Trust which is a private document that functions similarly to a will but does not need to be filed with the Court.
  • A Power of Attorney (POA) for Property. This document names a person as "agent" to act on your behalf in case of disability. The document covers financial matters (e.g., banking, bill paying, etc.) and can be broadly drafted or be quite limited.
  • A Health Care Power of Attorney. The health care POA designates an individual to make important health care decisions on your behalf, when you are unable, due to a temporary or permanent disability. This document can also be used to name someone to make health care decisions for your children in the event that you are unable to do so. Individuals may also consider creating a Living Will which specifically directs end-of-life instructions.
  • Beneficiary Designations. You should make sure appropriate beneficiaries are listed for all of your retirement accounts such as IRAs, 401(k) and life insurance policies. These assets go directly to named beneficiaries. If you do not have named beneficiaries, the assets will generally be distributed through your estate. Be sure to check older plans that may still name parents or ex-spouses that you may wish to update. (NOTE: When naming a minor, a guardianship proceeding may be required if the minor inherits, unless there is a trust.)
It is important to discuss these matters with your loved ones. An attorney can help answer questions that you may have, advise you on the best plan for your situation, and ensure that the documents are executed (signed) correctly. Creating your first estate plan can be an emotional process, yet the peace of mind in knowing that you have a plan in place can be reassuring. If you have any questions about preparing an estate planning or would like to begin the process, please feel free to contact Glick and Trostin, LLC at 312-346-8258.

To read the other posts in the New Parent Series, simply follow these links:

New Parent Series Part I - Dependent Issues and Tax Filing Status For You to Consider
New Parent Series Part II - Healthcare FSA's and HSA's
New Parent Series Part III - Child and Care Tax Credits
New Parent Series Part IV - Adoption Tax Credit and Benefits

Disclaimer: The materials on this website are provided for informational purposes only and do not constitute legal advice. Transmission of the information is not intended to create, and receipt does not constitute, an attorney-client relationship between any attorney and any other person, group or entity. No representations or warranties whatsoever, express or implied are given as to the accuracy or applicability of the information contained herein. No one should rely upon the information contained herein as constituting legal advice. The information may be modified or rendered incorrect by future legislative or judicial developments and may not be applicable to any individual reader's facts and circumstances.

1 comment:

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