Planning for Young Families
Being the dad of two young boys, I often meet new parents while attending birthday parties, school events, and play dates at the park. Whenever my line of work comes up, I am always happy to discuss and answer questions about what I do. What always strikes me is that more often then not, many parents think that my clientele consists primarily of rich retirees or otherwise very wealthy individuals. They assume that these types of people are the only ones who need estate planning. However, they are often surprised when I recommend that they should consider planning on their end, as in many cases, it may be more important than anything my older clients have to worry about. Over time, in light of my experiences, I’ve developed a bit of a niche with younger families, because in many cases, they are the people most in need of proper planning. In my opinion, these types of families are underserved by many estate planning lawyers, because traditional firms don't value them as clients and aren't willing to provide flexibility and services that young, growing families need.
Therefore, I thought it would be helpful for those with young families to consider a few reasons why they should put together an estate plan:
1) Guardianship of Children – The number one reason young families should consider at least some level of planning is to designate future guardians for your children in the event of your death. People often assume that someone in their family will take care of their children in these cases, but most of the time, they don’t think of specifically who would be the best person and whether that person would be willing to take the responsibility on. For example, your parents may be too elderly or maybe you have a brother or sister in mind who you'd like to raise your kids, but they already have three or four children of their own. You may have another family member who may look responsible in a courtroom, but who you wouldn’t even trust to water your plants. Unless proper planning takes place, a judge will decide who will take care of your children based on the what he/she perceives to be the best situation, even if in reality, it is not. The decision may go forward without your input or wishes being followed at all.
2) Quick Action – If you and your spouse are either incapacitated or suffer an untimely death, proper planning can ensure that those who you designate to act can begin working for you and on behalf of your children immediately. By executing a power of attorney and designating successor trustees, your assets will be available as they are needed, without going to court, to continue providing for your children’s health, welfare, and educational needs. Also, without quick access to funds, an undue financial burden may be put on your family to continue to pay for your children while your assets are sorted out by a probate court (see #4 below). Most people don’t want their families to suffer this stress in addition to dealing with the grief and difficulties in caring for children who have lost their parents.
3) Retirement / College Savings Planning – Engaging in estate planning sooner rather than later goes hand in hand with planning for your retirement and educational savings for your children. By starting proper planning now, you can ensure that beneficiaries are named properly, that your savings and investment accounts are available to the right people if needed, and most importantly, that your plans for your children will continue even if you aren’t there to see them play out.
4) Avoiding Probate – Probate is a court led process in which your assets are accounted for and ultimately distributed to your heirs either by the wishes in a will or by statutory direction in cases when the deceased left no will. It is a formal process which is both time consuming, as a typical case can take eighteen months to two years, and expensive due to fixed attorney, court, and administrator fees.
Those dying without a will or trust have their assets divided up and given to those family members entitled to inherit by statutory design called “intestate succession”. Depending upon how your family is structured, who gets what may not match up with your wishes. You may want to leave your car to your brother or one account for one child and another for the other. Intestate succession does not take that into consideration at all; rather it mechanically distributes your assets as an operation of law without taking into account needs or the desires of the deceased. Prior planning can ensure that special property or unique distributions will be made in the way that you want them to.
5) Modern Families – There are all kinds of families these days and unfortunately the laws governing estates have not kept up with the times. If you are a blended, divorced, international, or other non-traditional family, the laws may not be on your side for handing an estate upon death. There can be major tax issues involved with not planning ahead as well as unintended directions from the probate code about who may inherit certain assets. By planning now, there are instruments that can completed that side step or take precedence over the rules and statutues that you wish to avoid.