It is common for young families to hesitate or even fail entirely to set up and estate plan because they are healthy and young, or simply because any extra expense early on can seem impossible or a luxury that they can do without. The sad reality is that these days, anyone can be taken suddenly by an unfortunate illness or accident. It is human nature for all of us to think “that won’t happen to me,” but preparing for the possibility that something could happen is prudent and responsible. Furthermore, estate planning can be inexpensive and tailored to each young family’s needs and financial means. For example, a young family can set up the essential documents and perhaps term life insurance, then revise and upgrade as their financial position improves. A young family can set up a suitable estate plan that includes the following:
Nominating a Trustworthy Administrator
The person selected will be in charge of managing final financial matters such as figuring what bills need to be paid and pay them, identifying and valuing all assets, distributing assets to the appropriate person(s), and hiring professionals such as attorneys and other advisors as is necessary. By selecting such a person yourself, you can have the peace of mind knowing that you’ve selected a trustworthy person capable of such a big responsibility instead of having a court select one for you.
Selecting a Proper Guardian for Minor Children
Determining who should raise your children should something happen to both parents is perhaps the most important decision parents can make. This of course, is something that parents of young children understand very well. However, what some young parents might not realize is that if they don’t name a guardian in an appropriate legal document, a court that is not familiar with their values, wishes and family members will appoint one for them.
Specifying Instructions for Distribution of Property
A majority of married couples want and expect their assets to pass to the surviving spouse should one of them pass away. It is also normal for parents to want their assets to be used for the caring of young children should both parents pass away. Having a detailed estate plan that lists instructions on just how the assets should be used for the care of the children is imperative. For example, instructing that monies should be held in trust for college or a home and having the remaining balance given to them at age 25 or 30, instead of giving an 18 year old a substantial amount of money that can be easily misused.
Putting a Newly Purchased Home in the Name of a Trust to Avoid Probate
A young family works hard and finally raises enough money to buy a home; unfortunately, if that home is not in the name of your trust (essential part of an estate plan) probate court will get involved and charge a fee of up to 5% of your estate to ensure the property is given to the correct person(s). Something easily avoided by setting up a basic estate plan.
Planning for Disability
Higher statistics show that either one or both parents will become disabled due to injury, sickness or accident at some point in their lives. As such, parents need Advanced Health Care Directives that provide someone legal authority to make medical decisions if they can’t make them for themselves. HIPPA authorizations will allow all physicians authority to share and discuss your medical situation with others of your choosing. Also, because life insurance does not pay at disability, disability income insurance should also be discussed.
Attorney Ray Padilla is the founder and President of Ray Padilla Law, APC