Most people don’t think about estate planning when they’re young and strong. Others won’t even think about creating one because they don’t have substantial assets and savings to pass on to their children.
While there are several reasons why estate planning may not be necessary to some, there are also compelling reasons why parents should have one. The estate planning process is good preparation for your children’s future, especially if they’re young.
Discover how you, as a parent, can secure your children’s future by estate planning even when you’re at the peak of health.
In This Article
1. Draft A Comprehensive Will
A will contains instructions from a person who has just passed on about how their estate should be managed. Thus, creating a will is often attributed to persons who have substantial assets, operate a business, and have multiple children or grandchildren.
This legal document contains more than just asset division, though. Depending on the testator’s or will originator’s wishes, it can include terms and conditions on how their affairs will be handled, most notably how the minors can inherit the properties and assets. A will originator can also name a person or relative who shouldn’t access their estate.
There may be online will-drafting platforms out there, but the best way to go through with it is to visit Johnson Law Group or other law firms to provide you with valuable information and advice on how to move forward with estate planning.
2. Choose The Ideal Guardian For Your Children
As a legal document containing the wishes of a deceased person, parents can use the will to appoint a guardian to take care of their minor children. While the law automatically assigns the custody to the surviving spouse, assigning a legal guardian becomes crucial if something happens to both parents.
Choosing the correct guardian for your young kids is key to ensuring that their needs are well taken care of even after you’re gone. The guardian should take their responsibility diligently and provide your children with their basic needs at the minimum.
Without a nominated guardian, the court will appoint a caretaker for your young children, as a probate court does for the deceased who dies without a will. Unfortunately, the court may decide that your children live with their closest relatives who may not be the best option for you. As a parent, you want to put your children’s interests on top of everything by choosing the ‘second-best parents’ for your kids.
3. Get A Life Insurance
Owners can use life insurance in many ways to spend for their children’s needs at any stage of their growth. For instance, if any parent passes away, life insurance can provide for the daily needs of beneficiaries, including the surviving spouse and minor children. If the child is attending college, life insurance can ease the hefty costs of university education. Some parents may use life insurance to build up the assets to pass on to their children.
There are two types of insurance: term and universal life insurance. Each has its pros and cons, so parents should talk to financial advisors about their financial goals. Comparatively, term insurance is purchased annually and has lower premiums than universal life insurance. The latter, however, provides owners with a cash-savings build-up, making an attractive option to save up for your children’s future.
4. Name Your Children As Beneficiaries
Some financially savvy parents may have purchased life insurance before they became one. To make sure your children can get the benefits if they die an unexpected death, update all your insurance policies and your records to reflect this significant life change. Include your children as secondary beneficiaries and your spouse as the primary beneficiary.
5. Set Up A Trust
Creating trust is another good way to plan for your children’s future. They offer better control of your properties and assets but may be more complex to manage actively. The good thing about trusts is they’re done outside of the probate court, unlike wills. Trusts take effect as soon as you sign and fund them, whereas a person can only activate the choice after the originator passes away.
A trust works by holding or freezing your assets until your children reach legal age. With trust, you’ll have more control over what happens to your properties. For instance, you can identify a trustee who manages, invests, and distributes the properties to the minor according to the terms of the trust. A trust also allows parents to determine how the assets can be used and in which circumstances they can be transferred, among specific other conditions.
As a parent, there’s nothing more fulfilling than providing your children with the best future. Besides saving up for education and living expenses, wills, trusts, and insurances may be used to ensure that you stay on top of your finances at every stage of their growth, even after you leave this world.