Most parents worry about how their assets will be protected and preserved for their children after their death. Family estate planning helps.
Being a parent to young children is stressful. Not only are you worried about the health and safety of your little ones, you also have to find a balance between work and home, play-time and nap-time, soccer practice and dinner. Estate Planning is likely the last thing on your mind. Estate Planning, however, is incredibly important, especially for young parents.
Many young parents have the misconception that Estate Planning is reserve for people with a lot of assets. They believe that because they, as young people, are just starting to accumulate some wealth for themselves, that they are not ready to discuss Estate Planning options with an attorney. But Estate Planning is just as, if not more, important for young parents than it is for adults with grandchildren.
When thinking about Estate Planning options as a young parent, the first question to ask is:
If you pass without an Estate Plan that includes a Guardianship Provision, then a court will determine guardianship. Seeing as a court does not know your family dynamic, this is not a good option.
The answer to that question may cause some introspection and frustration between couples, married or otherwise, but it is the most important question to ask yourself. This person, or persons, will essentially take on the task of raising your children for you if you are no longer there to do it yourself. They should have a similar temperament, similar attitudes toward raising children, and the ability to handle their finances.
Guardianship is just one piece of the puzzle when thinking about Estate Planning solutions for young families. You work hard for the wealth you accumulate, and you want your children to reap the reward of that hard work. Moreover, you do not want to burden the Guardians of your children with the financial responsibility of raising them.
The best Estate Planning solution for this situation is to establish a Revocable Living Trust with a Testamentary Trust provision. A Testamentary Trust is a trust that is only created after your death. Each of your children will have their own separate Testamentary Trust with identical provisions. Those provisions include allowing the Trustee of the Trust (usually the Guardian of your children) to use trust funds for the health, education, support, and maintenance of your children until they reach a certain age (determine by you), at which point your kids can begin receiving the trust funds outright and free of trust. Testamentary Trusts can also be included in a Will if you think that a Revocable Living Trust might not be right for you.
To learn more about Guardianship, Revocable Living Trusts, Testamentary Trust provisions, or Wills, please visit any of the pages under the heading "Related Topics." And if you have any more questions about how to best protect your family, please contact Vince Taormina, an estate planning attorney and child guardianship lawyer with The Taormina Firm.
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