Young Parents and Estate Planning
I am often asked to meet with young parents to discuss what type of estate planning is necessary now that children are in the picture. While everyone needs to have some basic planning in place, the birth of children is a milestone which makes it critically important to make sure that the important issues are addressed.
The following documents are critical for any young parent:
A Will with Testamentary Trusts, to assure that assets remain available to the surviving spouse in the event of a death. Otherwise, the PA default provision provides for approximately one-half of your probate assets to pass to your child or children instead of the surviving spouse. In addition, the Will is where permanent Guardians of your children are named, so the Court knows your desires about who should be formally appointed to care for your children if both parents pass away. You don’t want to leave this important decision up to a judge who doesn’t know you or your family.
It is also important that your Wills create one or more trusts to take care of finances for your children until they grow up. Otherwise, the Court will appoint an independent financial guardian, often an attorney or accountant, who will make decisions about the children’s financial affairs until they turn 18, at which point such young children have complete control over financial assets they are unaccustomed to managing.
General Durable Power of Attorney for both of you should be drafted. Your Power of Attorney can manage your affairs during periods of incapacity, or if you are simply ready for a helping hand. You would likely be the initial Agent for each other immediately, with named successors as the back-ups in the event of incapacity.
Medical Powers of Attorney and Living Wills for each of you, which will update these documents with recent changes in Pennsylvania and provide specific guidance for your family about who is in charge, and how to make important medical treatment and critical care decisions (for example, artificial respiration, feeding tube decisions, hydration, non-comatose severe brain damage, etc.) if you are incapacitated by injury or illness.
HIPAA Authorizations, to assure that family members can obtain information regarding your condition from hospitals and physicians, even if they are not currently the designated medical Agent making decisions. HIPAA laws otherwise can prohibit medical providers from sharing information regarding your condition and care.
Temporary Standby Guardian Designation so that in the event that neither of you is able to serve as parents, due to death or incapacity, your designated Standby Guardian will have immediate authority to care for your children pending permanent appointment of a Guardian as designated under your Wills.
The above items take care of the basic parent estate planning documents. We prefer to accompany these with the following in our Young Parent planning:
Summary of Nominated Individuals, which I like to prepare for all of my estate plans, to bring together in one place the identity of various people assisting in your plan, such as Agents, Trustees, Executors, and more. This helps remind families who is responsible for what, and when.
A Diagram of Wills and Trusts is a helpful tool I design for every plan, visually depicting how the plan operates as it moves through the various stages of vitality, impairment or death which may lie ahead (hopefully, far ahead). It is useful for explaining plans to family members, how things are integrated, and even reminding yourselves how you have planned for your family.
Estate Organizational Materials which I have prepared for my clients to complete, to help provide families with information which will be helpful to ease the transitions during periods of incapacity, or following a death. While the legal matters are addressed in the legal documents, easy access to certain categories of information can further help to avoid confusion or delay when your life takes a difficult turn. Such materials include inventories of your assets, location of important documents, your goals for your children, funeral directions, disposition of heirlooms and personal items, and more.
For any estate plan to work properly, careful attention to the manner in which assets are titled, and/or beneficiaries named, is required. We often provide young families with a memorandum of instruction regarding how their specific assets should be titled, and how beneficiaries should be identified for the best tax advantage and protection. Otherwise, the plan may not operate properly for your family. If necessary, we can assist with preparation of any beneficiary designation forms provided by your financial institutions, though most clients handle this on their own at this stage.
Contact us today to start this process before time slips away. Don’t let protecting your family be one of those things you meant to do, but didn’t. As always, we are available to answer any questions you may have regarding estate planning issues for your family or your family-owned business.