Tragedy strikes both the young and old. It’s not fun to think about worst-case scenarios, but being prepared can help ease the burden for surviving family and friends if anything were to happen to you.
As young parents or parents-to-be, it can be difficult to face the thought of death when surrounded by so much life in your young children. But take steps to put your estate in order. By being financially prepared, you can rest easy knowing that your family will be taken care of if something happens to you.
Make sure you have these basics in place:
If you have young children depending on your income, you and your spouse need life insurance. Upon your death, a life insurance policy will help support your children during their childhood, and pay for large expenses like their college education.
A Will, Guardianship for Your Children, and a Trust
If both you and your spouse pass away, there’s a lot to figure out to settle your estate. This is best done with a will. Many times, you’ll also want to establish a trust as well to better protect your family and your assets.
Your will dictates how to distribute your possessions if you were to pass away. But even more important, you can name a guardian for your children. You — not the courts — should make the decision about who will raise them if you aren’t around and without these documents the decision is made by a judge in probate court.
You’ll also want to name the person who will take care of the estate until your children reach adulthood. This person can be the same as the guardian, but you can choose another person if you wish. Have a conversation with the people you want to name to ensure they’ll accept taking on these responsibilities should anything happen to you.
Establishing a trust is a smart move as well. especially for people like business owners, those who own property in multiple states, those with spouses who are not American citizens, or those with disabled dependents. For example, if a husband owns a business with a partner in a community property state like California, his wife will own part of the business upon his passing. His estate planning can be set up in a way so that his business partner can automatically buy out his wife from the business.
Advanced Directives and Power of Attorneys
Advanced directives go by many names, including the term living will. Their purpose is to state your end-of-life choices, including heart or breathing resuscitation, mechanical ventilation, and so on.
You’ll also want to name a power of attorney for both your medical decisions and your financial decisions. These can be the same person, but they can be two different people if you wish. A power of attorney authorizes someone to make decisions on your behalf if you are incapable of doing so yourself. Most people list their spouse, but you’ll want to name a backup in case both you and your spouse are incapacitated at the same time.
End-of-life care decisions are never easy. By stating your wishes and appointing a designated person to carry them out, you’ll give your family peace-of-mind that all is being done in the way you would have wanted it.
Estate Planning is a Must-Do
Estate planning is necessary and becomes even more important for parents of young children. Failing to put together your estate plan might not impact you, but it will leave the ones you love most vulnerable.
If you don’t have your estate plan in place, start today. Call up a local financial planner or accountant and ask for a recommendation for an estate lawyer and ensure your family will be taken care of should the worst happen.