Many people wait to start estate planning until they are close to retirement age or facing major medical challenges. However, some people begin estate planning not for their own needs but out of concern for their loved ones.
Parents who have just added children to their families are often anxious about ensuring the health and well-being of their children. Worries about what their children could experience in the future might motivate parents to create or drastically revise estate plans.
There are several key ways that parents can protect their minor children through estate planning, including the three common choices outlined below.
Selecting an appropriate guardian
If parents die while children are still minors, the children have no one to support them anymore. They could end up living with extended family members or even in foster care. Parents may need to have difficult discussions with people they trust to select appropriate guardians to take on a parental role in case anything happens to them.
Protecting resources for the future
Children have minimal legal authority. Generally, they are subject to their parents’ management of their resources. A large inheritance left for minor children or a large life insurance policy payout could end up under the control of a surviving parent or the guardian who assumes authority over the children.
Guardians might squander resources intended to supplement the children’s standard of living and allow them to establish themselves when they become adults. Parents may choose to establish trusts to limit the use of inherited resources and preserve assets for when their children become adults.
Preparing for an emergency
Death is not the only scenario in which parents may be incapable of meeting their children’s needs. An incapacitating medical emergency, such as a stroke or a coma caused by a car crash, could leave a parent incapable of caring for their children and managing family finances. Powers of attorney can help ensure that there is someone to support the parent while they are incapacitated and to manage the household on their behalf for the sake of their children.
Creating a thorough estate plan while children are young can limit the possibility of emergencies harming the children. With experienced estate planning guidance, new parents can better protect their children with the appropriate legal documents.
