Parents have an obligation to take care of their children. Many parents try to fulfill that responsibility even in situations where they may no longer be present to care for their children.
For many parents, having children is what inspires them to create an estate plan. They want to ensure that if anything happens to them their children can still enjoy a safe and comfortable childhood. Parents establishing estate plans often need to consider factors that other people may not.
What are some of the most important details for parents to address when establishing or updating an estate plan?
Naming a guardian for dependent children
When parents die, children are left without the guidance, support and affection they could have received. A guardian can fill that parental role by providing shelter, helping a child with their education and otherwise overseeing their daily life. The process of selecting a guardian is one of the most important elements of estate planning as a parent. People have to consider where the prospective guardian lives, the demands on their time and their capabilities when choosing candidates.
Protecting the children’s inheritance
Children usually cannot own property. Until they become adults, their parents manage their resources on their behalf and also have responsibility for their debts, such as medical bills. If parents die while children are young, any inheritance or life insurance that may go to the children is under the control of their guardian. Even typically moral people can become greedy when they have unsupervised access to large inheritances. Establishing a trust is one way for parents to ensure that the assets they leave for their children go toward their upbringing and comfort. Trusts can also help ensure that there are assets still available when they become adults.
Addressing financial obligations
To leave a significant inheritance for children, parents first have to resolve their financial obligations. For many people, life insurance is a crucial form of protection against creditor claims during probate proceedings. Other times, parents may want to engage in asset protection planning and other efforts to ensure that their estates can fully cover their debts or preserve some of their resources if they die unexpectedly.
Parents may need to discuss their family circumstances at length with a skilled legal team to determine the best way to create an estate plan for the protection of their children. Guardianship and financial resources are both top issues that people likely need to address.