When your family is young, adding one more thing to your “to do” list can feel overwhelming, but creating an estate plan is as essential as buckling seat belts when you travel. Even for families of modest means, an estate plan protects assets and provides for the futures of young children.
Finding a professional estate planning attorney who understands your concerns and can help you with the necessary legal documents is critical. When the task is completed it will provide peace of mind, knowing that your children’s futures are protected.
What’s In an Estate Plan?
There are several components to a comprehensive estate plan. While young families may not have a lot of assets now, a plan can expand to encompass future growth, such as buying property, starting a business, and planning for college educations.
Essential tools of estate planning include:
Wills. Everyone has heard about wills but may not understand how they interact with other estate documents. A will is the foundation, the first building block in a comprehensive plan. A will determines how your assets will be divided and guides how the probate court handles your estate. A will does the following:
- List of heirs. Include each child and your spouse or partner. (Your estate attorney can help decide how to include any stepchildren.)
- Details of property owned and the type of deed.
- Names a guardian for your minor children.
- Lays out how your assets should be divided. Without a will, probate court defers to state law, which often divides assets, including property ownership, equally among your surviving spouse and children. Those who want their spouse to inherit the assets until the children reach maturity must make that clear in their will.
Financial tools. As you add to your assets it becomes increasingly important to plan for how they will be handled when you die. These should be updated regularly as your family grows.
- Trusts. Creating a trust for your children protects the assets in it from probate court, allowing them to be allocated to your surviving family members quickly. Through a trust you may dictate how and when assets are paid out to heirs. A revocable living trust can name a trustee to manage assets for your children until they reach a specified age or milestone.
- Powers of attorney. These legal instruments can be narrowly or broadly written to assign specific duties to a trusted family member, friend, or employee to handle financial decisions (such as for your business) or healthcare decisions. Powers of attorney cease when you die.
Beneficiaries. If you own property or have other assets and die without a will or estate documents, the probate court follows state law to determine who receives ownership.
- Deeds. Probate court can require the sale of any property to divide proceeds among your heirs. If you name a person as a co-owner on your deed, as in Joint Tenancy with Right of Survivorship, ownership passes directly to them. Changes like this must be legally documented, witnessed, and filed with the county recorder to take effect.
- Beneficiaries. Life insurance policies, checking and investment accounts should have beneficiaries named on them. This overrides a will, allowing the beneficiary to receive the account. Without a beneficiary, probate court follows state law to divide the account among heirs. Designating a beneficiary is a simple matter of filling out a form with the name of your spouse or children on it for each account.
Finally, it’s important to discuss your estate plans with everyone involved to make your wishes clear, thereby reducing any disagreements among family members. Those named as potential guardians of young children and financial or healthcare powers of attorney should also be consulted to make sure they agree and understand the implications.
What To Do When You Have Questions
Estate planning is not a “one and done” situation; documents must be updated periodically as your family grows and circumstances change. A professional estate attorney from Lam Law Firm can get you started on the path to peace of mind, knowing that your family’s future is secure.
