Estate planning for young parents

When you look into your baby's eyes, your first thoughts are not what would happen if you die while your children are young.

Sadly, though, it sometimes happens, a reason attorney Greg Bonney recommends estate planning even for young parents.

"If you don't have a will, the courts will decide who will take care of your children and who will handle the money for the children," he said. "It can get expensive. The court will appoint a guardian ad litem to be an advocate for the best interests of your children."

If you have not provided direction, the guardian ad litem performs an investigation and recommends who should be named guardian of the children; the person recommended may not be who you would want to raise the children. Designating your choice could also avoid a disagreement within the family.

To prevent this, Bonney recommends documents that:
  • Nominate the guardian for your children if you die while they are minors.
  • Nominate a trustee to handle the money for the children.
  • Explain how money and other assets are to be distributed. For example, you could set up a trust for your children so that all or a portion of the money is held until they reach a certain age. You also could describe how and for what purposes the funds would be distributed from the trust until the children have direct control over the funds.
Bonney also recommends that parents make sure beneficiaries named on insurance policies and retirement accounts are consistent with your wills. For example, if children are listed as beneficiaries, they would have complete control at age 18 even though your will may have indicated the funds should be held for the children in a trust until they reach an age older than 18.

One other document that Bonney recommends for young parents is a power of attorney delegating parental power to another person if the parents are out of town or temporarily unavailable.

"By using this document, parents can make sure that the authorized person can consent to or authorize medical care in general or in specific areas," Bonney said.

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