The goals and priorities of your estate plan will change throughout your life. We often explain that estate planning is a process, not an event. Once created, your plan must evolve with the seasons of your life so that it will continue to do what you want it to. Estate planning for young families looks different than estate planning for an elderly couple, and it should. If you have a young family with minor children, here are the key things your estate plan should focus on right now.
Estate Planning for Young Families: 3 Key Priorities
Protection and Provision for Your Spouse
Estate planning helps you prepare for your possible incapacity or death. In both situations, you would be unable to work or help care for your family. Each spouse must consider what they can do ahead of time to protect and provide for the other if the worst should happen. This requires you to consider the financial, emotional, and practical aspects of life. This is because your spouse will need more than just money to carry on by themselves, especially with young children.
You will need to plan for how to get your assets to your spouse, but you should also think about questions such as:
- Will my spouse have enough ongoing income in the future, based on what we make right now?
- Who will help my spouse care for our children? This means care from both a practical standpoint and a nurturing/relational standpoint.
- Will my spouse be able to stay in our current home alone? If not, what plans can we put in place now to aid that transition?
- Thinking through questions like these now will help you be more prepared if a time comes that you must implement your plan.
Guardianship of Your Minor Children
Second to providing for your spouse (who will care for your children) is your responsibility to appoint a guardian for your minor children. In the worst-case scenario, you and your spouse both become incapacitated or die. Though the likelihood is low, this tragedy happens to far too many families.
If both parents die or become incapacitated, it is critical that children have a guardian who is ready and able to care for them. A good estate plan allows you to choose a guardian and backup guardians so that you control who takes charge of your children.
Related: Who Will Take Care of My Kids if I Die?
Protection of Your Minor Children’s Funds
The third key focus of estate planning for young families is setting up a plan to protect and allocate your minor children’s inheritance if you die.
Allowing minor children to inherit a large sum of money is never a good idea. And, to allow their guardian to be the one managing their inheritance can also lead to problems. If their guardian is their sole caretaker and the person managing their inheritance, it leaves room for your children to be taken advantage of. To create a system of checks and balances, we recommend you appoint a money manager for your children. This person should be a different person from their guardian, but willing to work with their guardian in the best interest of your children. This team setup helps prevent your children from harming themselves with too much money early in life. It also prevents one person from having disproportionate control of your children’s care and their finances.
Related: 3 Tips for How to Choose a Guardian for Your Child
Estate Planning for Young Families: Start with the Important Parts
Estate planning addresses a lot of details, and other topics may arise as you begin planning for your incapacity and/or death. But for young families, these three topics are by far the most important to address in your season of life.
Don’t walk through the process alone. Schedule an appointment today and let us help you create an estate plan that guarantees you will be able to care for your loved ones even after you are gone.
