While most clients don’t think of estate planning as an activity one does FOR and WITH their children, I can make an excellent case for why they should. When your children are young, of course, you want to do everything you can to protect them, including if something happens to you while they are still minors. But, to my mind, it doesn’t end there. Once your children are older, nearing adulthood and beyond, it is time to consider a mindset of not just doing it for them but with them.
First, let’s outline the important provisions you want to make in your estate plan for your young children.
Estate Planning FOR Your Children:
- Naming Guardians:
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- One of the most critical decisions is naming guardians for your minor children. If something happens to you and your spouse, your children will be cared for by someone you trust.
- Setting Up Trusts:
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- A trust can be established to manage assets on behalf of your children until they reach a certain age or milestone. This can protect their inheritance and ensure it’s used for their benefit, such as education, healthcare, and living expenses.
- Education Funds:
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- Consider setting up 529 plans or other education savings accounts to ensure that funds are available for your children’s education. These accounts can be structured within your estate plan to provide for ongoing education.
- Life Insurance:
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- Life insurance is critical to estate planning, particularly if your children are young. The proceeds from a life insurance policy can provide financial security for your children if you pass away unexpectedly.
- Designating Beneficiaries:
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- Make sure that your life insurance policies, retirement accounts, and other assets have designated beneficiaries to ensure that the assets pass directly to your children or their trust, ideally avoiding probate.
Estate Planning WITH Your Children:
- Involving Adult Children in Discussions:
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- For adult children, it’s important to have open discussions about your estate plan. This can help avoid surprises and conflicts after your passing and ensures they understand your wishes.
- Gifting During Your Lifetime:
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- Consider making gifts to your children during your lifetime. This can be a way to reduce your taxable estate and also see them benefit from your wealth while you are alive.
- Education on Financial Management:
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- Educate your children about financial management, particularly if they will be inheriting significant assets. This can involve discussions about budgeting, investing, and managing trusts.
- Incorporating Their Input:
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- Depending on your children’s ages and maturity levels, it might be wise to incorporate their input into the estate planning process. This can include discussing their preferences for certain assets or their willingness to take on roles such as executor or trustee.
- Healthcare Directives:
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- Discuss your wishes regarding healthcare and end-of-life decisions with your children. Make sure they are aware of any advance directives, living wills, or healthcare powers of attorney you have in place.
As your family grows, it is important to review your estate plan regularly and update it as needed. I offer my clients a complimentary review every three years to help ensure their plans are up-to-date. I’ve seen where an outdated plan is almost worse than no plan at all.
The above are just the basics. If you have a blended family, special needs children, or other unique situations, it’s mission-critical to create your plan with an experienced estate planning attorney like myself. You want to work with someone who has hands-on experience with a wide range of situations and can ensure your plan fits your unique vision and needs. It’s all about protecting your assets and loved ones. I would be honored to help your update or create your unique estate plan. It’s easy to get started – call me at 513-399-7526 to schedule a consultation, or visit my website, www.davidlefton.com, for more information.