It's Time For a New School Year: Have You Done Your Homework?
A lazy summer can easily become a busy fall. While the adjustment can be tough on kids, we all know that parents carry the bulk of the weight. Organizing carpools, daycare, lunches, and activities along with establishing bedtimes and encouraging homework can consume nearly all of our energy. Amidst this, there is one homework assignment that many parents put off: executing an estate plan. Completing those documents seems to get pushed to the backburner. Unfortunately, parents don’t realize until it’s too late that this should be their highest priority. Here are some important reasons to complete your estate plan before Back to School Night consumes you:
- Choose a guardian for your kids. Parents want to choose their children’s guardian instead of leaving this crucial decision to a judge. Without an estate plan that nominates a guardian, a judge has to decide who will raise your kids based on very limited information. If multiple family members or friends wish to be your children’s guardian, it can cause a lot of drama and turmoil with your children stuck in the middle. Ultimately, what the judge decides might go against your wishes and your children could be raised by someone you would not have chosen.
- Ensure that your money benefits your kids, but lasts beyond their 18th birthday. What would you do if you had received a lump sum of cash at age 18? Probably not invest it in a properly-managed retirement account. Unless you plan, your children would be entitled to receive their inheritance on their 18th birthday. A thoughtful estate plan can ensure that your money is properly managed, supervised by someone you trust, and used for the things you value the most: your child’s health and education, for example. You can delay your child’s receipt of funds and teach them responsible money management until they are old enough to make wise decisions.
- Have tools in place for your incapacity. While no one wants to entertain the thought of becoming incapacitated, it happens. Choosing someone you trust to make health care decisions for you if you cannot make them for yourself means you will be in safe hands when you are most vulnerable. Having a signed Power of Attorney is also a good idea because your financial responsibilities will be covered until you are again able to take care of them. Someone needs to open the mail and keep the utilities running if you aren’t there to pay the bills.
- Consider the dynamics if you have a blended family. If you have a blended family and children from a prior marriage, estate planning becomes even more important. If you have children from a relationship before you married your current spouse, your spouse would not be obligated to provide for those children. While we might hope that our spouses will act in accordance with what we would want, there are no legal guarantees this will happen without creating a Will or Trust.