New Parents And Estate Planning

New Parents And Estate Planning: How To Get Started

July 26, 2018

Most new parents know they should get their affairs in order. Most don’t know where to begin. Here’s some information to make it a bit easier.

Call A Lawyer To Schedule An Appointment

First, call us or another lawyer with experience in estate planning (wills, trusts, power of attorney, health care directive). Understand that lawyers are the only ones who can draft these documents for you. Many other industries (including the financial services industries) like to call themselves “estate planners.” While these financial representatives can be great resources to help you plan and manage your money, they will always have to refer you to a lawyer to get your will and other estate planning documents done.

If you are concerned about pricing, just ask. Lawyers have an ethical duty to explain how they charge their clients. Most firms, like SW&L Attorneys, are transparent with price. We will give you a rough estimate right away. After we meet, we will explain exactly how much we think it will cost, and you are free to decide whether or not to hire us or not hire us.

Items To Think About Before The Appointment

At your meeting, your lawyer is going to ask you a few things.

1. Guardian

As young parents, the primary goal of your estate plan is to plan for a disaster. Disaster means both parents pass away unexpectedly. If you both pass away, your child will be left without a legal guardian. In your will, you are able to name what is called a testamentary guardian. The proposed guardian will still be reviewed by the court, but the court gives a very high amount of deference to your named guardian. You should discuss who you would like to be your child’s guardians if you both pass away unexpectedly.

2. Trustee

We almost always recommend a trust of some kind when young children are involved. If you both pass away, your child will need money for clothes, doctors, school, and other necessities. It’s not wise to devise assets directly to your child, so we usually recommend they be held in trust. You’ll need a person to manage the trust, though. That person is called a trustee. You should discuss who you would like to manage your children’s money if you both pass away unexpectedly.

3. Personal Representative

If you die and probate needs to be opened, someone will need to take up that responsibility to pay creditors and distribute assets. This person is called a personal representative. Usually, the surviving spouse is nominated. But if you both pass away together, you will need a personal representative. You should discuss who you would like to administer your estate.

4. Power Of Attorney

We take a comprehensive approach to estate planning. This means we recommend you do what you can to plan for events other than death — like incapacity. If you are incapacitated, you cannot take care of your own affairs like paying bills and taxes. You’ll need someone to make decisions on your behalf. It may be necessary to get a guardian. Short of that, though, you should have a power of attorney named to take care of those issues before a guardian is nominated. In some cases, a power of attorney is all that is necessary. The spouses are usually named as primary. However, you should discuss a successor power of attorney.

5. Health Care Agent And Directions

The power of attorney puts someone in place to make legal and financial decisions. We also recommend you give someone the ability to make your health care decisions if you are not able. This person is called a health care agent. Your spouse is usually primary, but we recommend you name at least one successor.

We also recommend you take advantage of your ability to make your own health care decisions ahead of time. This is called a health care directive or a living will. This document can cover a variety of issues, but the common issues are whether you want nutrition and hydration withheld in the event of your imminent death. You should discuss these issues.

6. Distribution Triggers

Lastly, the trustee needs instructions on how to distribute assets to your children. This usually comes as a mix of discretionary and mandatory distributions. Discretionary distributions mean the trustee can distribute assets when the trustee believes they are necessary for your child’s health, education, maintenance, and support. Mandatory distributions mean the trustee must make certain distributions. Usually, young parents will require the trustee to distribute all or part of the trust at a certain age. For example, half at age thirty and the rest at age thirty-five. You should discuss ages and other triggers for distribution.

What’s Next

Again, call an attorney first. Get an appointment scheduled. You do not need to know the answers to all these questions before the appointment. Most clients do not know all of the answers. The point is for you to start thinking about it. You will have questions.

If you need help with estate planning, please call our Estate Planning Team at SW&L. We are here to help.

This article is for information purposes only. Please consult an attorney to assist you with estate planning.