With a new baby in the house, likely one of the last thing on your mind as a new parent is the thought of creating an estate plan. During this time you are likely tired from the new changes in the house and elated at the new addition to your family. This time is both stressful and happy. However, you certainly should not procrastinate too long on contemplating the important decision of what will happen to your new baby if both you and your significant other are incapacitated or worse.
Here are just a few things to consider in the quest to give you and your family peace of mind for the future in the event the worst was to happen.
Appoint a power of attorney… for both you and your child.
A power of attorney is a document that appoints a person (an agent) to act on your behalf in the event you are ever incapacitated or seriously ill. An agent can be appointed to act on your behalf for financial decisions and medical decisions. Sometimes this will be the same person or persons. Other times, the person you appoint to handle your financial affairs will be different from the person you appoint to handle your medical care. You can even prepare special powers of attorney for your minor children, appointing the person you trust to make medical decisions for your children if you are unable and directing who should be guardian for your children in the event you are incapacitated.
Think about preparing a will.
People often don’t want to think about death. However, when you have minor children, it is imperative to plan for the worst. It is not enough to just have a general idea of who you want to care for your kids if something were to happen to you. Without a will, a court will not know what your wishes are for your children.
When a person dies without a will, they are considered to be “intestate”. Every state has special rules about how the assets of a person who dies intestate are to be distributed. When a person dies intestate and they have minor children, the court may have to open a separate proceeding on the issue of appointing a guardian for the children. The person the court chooses to be guardian may not be the person or people you had in mind for this important position.
On the other hand, a Last Will and Testament spells out exactly what your plan is for your property and the care of your children upon your death. Your will directs a court as to who you want appointed as the guardian(s) of your children and how you want your property to be managed for them. Creating a will is an important step in making sure that your wishes for your property and your children are carried out.
Consider the extra benefits and protections afforded by a trust.
While a will is certainly a beneficial document in making sure your wishes are carried out with regard to your children and your assets, a trust can offer even more protections and benefits to your children than a will.
Some of the benefits of a trust include:
When minor children are involved, attorneys drafting a trust often utilize a “Common-Pot Trust”. This is a method by which all the trust assets are pooled into one share to be used for all your minor children. A common-pot trust will often dissolve once the youngest child reaches majority, and everything that is left in the common-pot trust at that time is divided into equal shares for the now adult children.
Is a mix of both appropriate in your circumstances?
Maybe a trust is not the right solution for you and your family right now, but you like some of what a trust can provide. Consider an intermediate option: a Last Will and Testament containing a Testamentary Trust. This type of will contains a trust that only comes into being if it is needed upon your death. This would mean that the will would still need to be probated but if you have minor children at the time of you death the trust could kick into effect in order to make sure your assets are managed properly by the estate administrator and your appointed trustee for the benefit of your children.
All of these are great options to consider in creating an effective estate plan that will provide you and your family peace of mind for the future. Contact the office today to get started.
Jessica Brandow is foremost an estate planning attorney dedicated to providing quality legal service to all types of clients.