Kids bring with them a lot of added responsibility. If you have kids you already know this. If you are about to have kids, you will find this out shortly.
Of these added responsibilities, protecting them is an obvious one. But when you think of protecting your little ones, has the idea of protecting them after you have passed away, or become permanently disabled, ever crossed your mind?
(I will let you in on a little secret of mine. I never dwelt on the potential of my own death until I had a child.)
One of the responsibilities of having minor kids that you need to add to your list is to create a Will or a Trust. I understand that creating a Will or Trust causes you to think about and plan for death. But, you are already thinking about it anyway. Why not answer your “What-if” questions?
A Will or Trust can provide you with some certainty in the face of life’s complexities, such as who will have the right to be a guardian of your children if they are still minors. Or, dictating who will receive your assets and how those assets will be distributed.
If you have decided to answer your “What-If” question, I am providing a few tips to help:
Consider Potential Guardians for your Minor Children. For the majority of parents, this is the first and hardest step to complete. Whether it is due to difficulty imagining someone else raising your children, deciding on one person over another, not feeling like you have available options, not wanting to “burden” someone with your kids, not wanting to hurt someone’s feelings, or not having someone physically near you to care for the, this can prove to be the step that stops you from completing your Guardian Nomination in your Will. The problem is, this problem is still there and unanswered in the event that you pass away.
Consider Your Child’s Financial Needs after Your Death. Using a Trust in your plan prevents a child’s inheritance from being placed in a locked account controlled by the court. You have the opportunity to name a trustee of the trust, who will be responsible for managing the funds that will be used to raise your child. The Trustee will manage the funds how you decide. I help you with this, but think about the things you would financially assist your child with if you were present. Put this in the Trust. In addition to the specifics you provide, the trust assets will be used to pay for your child’s health, education, maintenance and support. Finally, you can designate ages you would like your adult child to inherit the assets in the trust outright. For example, some parents find that 35 is a more appropriate age to inherit a lump sum of money than age 18, Idaho’s prescribed age.
Update Beneficiary Designations. Make sure that your beneficiary designations are up to date on life insurance policies, retirement accounts, or other beneficiary-designated assets, and that these designations match the intent of your will or trust. When considering beneficiary designations and minor children, no designations or a designation directly to the child will result in that account falling outside of your plan and going directly into the child’s hands at age 18.
Create a Durable Power of Attorney for Care and Custody of Minor Children. If you are traveling, of your child is traveling, or you become disabled or incapacitated, a Durable Power of Attorney gives the person you designate the power to make medical and financial decisions on your behalf for the child. Absent this document, and without a spouse present to make the decisions for you, the only alternative to naming someone to take on medical or financial decisions for your child is through a court-appointed guardian.
How long should this all take? It depends on how to decide to tackle the planning, ie a Will or a Trust, but at my office, plan on taking time at home to fill out a questionnaire, one planning meeting that lasts 40 - 75 minutes. I will then draft and you will review your documents, followed by a short meeting to finalize your documents. Not so painful. Often the time it takes you to make decisions about guardianship far exceeds the time it takes to get the documents in place once those decisions are made.