Estate Planning for Young Families
By: Mike Sukup | Published October 10, 2016
I attended a wedding of a good childhood friend recently and while catching up with numerous friends I was asked a question, surprisingly multiple times: Do we really need to do a will or anything, or should we just wait until we get older? The answer to this question is simple, YES you need an estate plan. This is important for newlyweds, but it is vitally important for young families with children. As uncomfortable as the concept may be to discuss, estate planning is planning for the worst case scenarios. In all likelihood, these situations will not occur, at least not until later in life, but if they do it is extremely important to have a plan in place. So what all should be done? A basic estate plan will likely include a will, a general durable power of attorney, a health care declaration, and an update to beneficiary designations on certain assets.
A will plays a couple of vital roles as it pertains to your estate planning. First, it will outline who will receive any assets remaining at your death that do not have a beneficiary designation of some type. It will also appoint someone to handle the administration of your estate. Maybe most importantly, your will designate a guardian for any minor children.
The general durable power of attorney and health care declaration are two documents that every adult should have in place. These documents appoint a person to make health care and financial decisions on your behalf in instances of incapacity. The health care document will also include a HIPAA privacy waiver, allowing your named agent to speak with your doctors to be as informed as possible and a health care directive outlining your wishes regarding end of life decision making. Having these documents in place will be extremely helpful if something unfortunate happens to you in which you are still living but unable to communicate or make decisions on your own behalf.
The last part of the estate plan is ensuring the various beneficiary designations on different types of property are properly completed. I use “beneficiary designation” as an all encompassing term here, really we are talking about what are called non-probate transfers. A non-probate transfer allows property or an asset to pass directly to a named beneficiary without having to pass through the lengthy probate court process. You have likely filled out a beneficiary designation for assets like an IRA, 401K, or life insurance. There are other methods to accomplish this for different types of assets, such transfer on death designations (TOD) on vehicle titles, bank accounts, and standard investment accounts. There are also beneficiary deeds for real property.
While this a brief overview of a basic estate plan, no two families are the same and there are other options that may better suit your situation. Contact our office to schedule a consultation to get an estate plan in place that would best suit your family.