It is easy for even the most responsible and diligent of adults to procrastinate about estate planning. However, few things help people confront the looming specter of their own mortality more quickly and realistically than adding children to the family.
Whether you adopt or start a family after getting married, you want to ensure your children will have a bright future, no matter what happens to you. Estate planning can involve many different documents.
Those focused on protecting their children to the best of their abilities may want to include at least the three documents listed below.
Powers of attorney
In the event of your incapacitation, there won’t be a guardian to act for your children or someone to pay the bills at your house. Through the creation of powers of attorney, you can give people the authority to handle certain financial needs for you. A medical power of attorney could give someone the authority to make decisions about your care until you recover enough to speak about your own wishes.
A last will
Your last will designates certain property for certain people. It can be a good place to dispose of assets that have personal value but not necessarily financial value. Your last will can also include guardianship information.
You should think carefully about who you want to care for your children if you cannot do so yourself. Making sure you have their permission to name them to this crucial role is also very important. A thorough last will can even allocate assets to the guardian to compensate them for caring for your children.
Some people think that they should have either a last will or a trust in their estate plan. When you have children, it may make sense to include both. Your last will can allocate some assets, but a trust can protect the biggest property that you want to have pass to your children.
Do you own a business that will have intermediary management but will eventually pass to the children when they become adults? A trust can be a way to structure that transition. Do you own real estate that you want the children to continue living in with their guardian? A trust ensures that the children will eventually assume control over the property and that the guardian can’t sell it or finance it without trustee approval.
Thinking about what assets you have to leave to your children and what challenges they might face can help you create better protections for them in your estate plan.