The most common misconception estate planning attorneys hear is that someone doesn’t need an estate plan because their client isn’t elderly or on death’s door. Below are the stages of life we go through and the estate planning documents we should have during each.
We raise our children in the hope that they will become independent adults, but as they take bigger steps into the adult world, it is important to be able assist them if an unforeseen accident occurs.
The last thing on the mind of a college freshman is estate planning. She is thinking of classes, clubs, and if the boy in “Creative Writing” has a girlfriend. However, it is important that someone think about it; since parents who help their children with financial and medical matters will face challenges in continuing to do so after age eighteen. Once a child is a legal adult, the ability of a parent to obtain medical and financial information ceases.
In order to get medical information or to make medical decisions, parents need estate planning documents. It is illegal for the hospital to provide information without a release. For this reason, young adults should execute HIPAA releases which allow medical providers to release information. Young adults should also have durable medical powers of attorney executed. This allows parents to make medical decisions, if the child is unable to.
It is hard to think about a new baby and estate planning at the same time. One is new and literally screaming with life. The other is dry and conjures scenarios we don’t want to think about. However, estate planning is the one of the best gifts you can give your family.
There are two pieces to consider in preparing your estate planning. The first is to nominate a guardian and conservator for your minor children. A guardian can make decisions about your child if you die. This includes decisions about education, medical treatment, and social life. Asking someone to serve as the guardian is a big decision and you should feel confident that the nominated guardian will care for your children as you would have.
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A conservator controls the minor child’s finances. The conservator should be a responsible person who will carefully guard your children’s assets. The same person may serve as guardian and conservator, but you have may have reasons to separate the responsibilities.
The second piece of estate planning is ensuring that your children receive their inheritance when they are responsible enough to handle it. If a minor child’s parents die without an estate plan, the parents’ assets will be held by the court for the benefit of the child. The child will receive the inheritance at age eighteen with no limitations. Few teenagers will choose to responsibly invest their inheritance, if there are no restrictions on how they spend it. Estate planning allow you to control how the funds are spent. It is important to note that designating your children as beneficiaries on your life insurance does not prevent your children from prematurely receiving funds.
While it may be uncomfortable to think about your child growing up without you, estate planning can alleviate concerns about caring for your children if the worst happens.
The Golden Years
Your children are out of the house and you are almost retired or already on the golf course. With this extra time, you should dust off your estate planning and confirm it’s still appropriate.
One of the most common changes made to an estate plan is a change of fiduciaries. When your children are young, it doesn’t make sense to have them act as your agent under power of attorney or as the personal representative of your will. Now that they are adults, it may make more sense for your children to fulfill these roles rather than others.
In prior years, you may have had an estate plan that prevented the dissipation of your assets and held them to be used for things like college or first homes. This was appropriate when your children were young enough to think that a sports car might be a good investment. If your children are responsible, it may make more sense to simplify your estate plan. You may also wish to provide for your grandchildren or other family members.
Finally, it may also be necessary to deal with split families or children with special needs or financial issues, which require more sophisticated planning
As a rule of thumb, reexamine your estate plan every five to seven years or when a major life event occurs. You put in the work to establish a good estate plan. Don’t let the work go to waste by failing to update your estate plan to accommodate your life.
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