Studies show that the majority of young adults are going through life without any estate planning documents. Sadly, many of these people are the parents of minor children.
Estate planning is a core responsibility of adulthood. Even if you are a young adult who is single, at minimum you should have some type of estate plan in place that addresses the basics.
However, when you are a parent with young children, estate planning is an absolute must. You never know what the future holds, and you have dependents that are relying on you for everything. If the unthinkable was to take place, a lack of planning can make a devastating situation all the worse.
Guardianship and Income Replacement
Guardianship is a major estate planning issue for parents of minor children. Who would care for your children if both parents were to pass away together in an accident? This question is even more profound if you are a single parent.
The state would decide the fate of your children if you have no estate planning documents. On the other hand, if you nominate a guardian in your last will, a hand-picked caregiver will be standing at the ready if a guardianship is ever required.
Income replacement is also a very important consideration, because most young families rely on two incomes. You should make sure that your surviving spouse and your children will be able to carry on financially if you pass away unexpectedly.
Clearly, many younger people do not have enough time to develop significant financial resources organically. Life insurance is the income replacement vehicle that is typically utilized to make sure that there will be adequate financial resources available.
It is important to evaluate the level of need that would exist if one or both parents were to pass away. Over the years, the family expenses can increase, so you should always be prepared to adjust your coverage levels to adapt to changing circumstances.
Of course, children are not going to be in a position to handle financial resources that are in their name. There is a solution to this situation that is often utilized in the form of a testamentary trust.
A married couple with a child (or a single parent) that is creating a will could include a testamentary trust with the child named as the beneficiary. It would not be active until and unless the parents pass away. Should these unfortunate circumstances come to pass, a trustee that is named in the document would be empowered to manage the assets in the trust until the child reaches adulthood.
Children With Special Needs
Estate planning for children with special needs is another area of expertise for our firm. Clearly, youngsters that are in this position require very costly medical attention. Many youngsters with special needs qualify for Medicaid as a source of health insurance. Since it is only available to people with very limited financial resources, there are income and asset limits that govern eligibility. Supplemental Security Income is another need-based government benefit that many children with special needs rely on. A significant improvement in financial status could result in a forfeiture of these benefits.
To account for this, a supplemental needs or special needs trust could be created with the child as the beneficiary. The trustee would be able to use assets in the trust to satisfy certain needs that are not being met by Medicaid and the income that is being provided by the Supplemental Security Income program.
Take Direct Action!
If you are a parent with minor children still in your home, action is required if you do not have an estate plan in place. Our firm can help you devise a plan that protects your loved ones so that you can go forward with peace of mind.
To set up a no obligation consultation, give us a call at 512-478-3800 or send us a message through our contact page.