Young families may put off estate planning for various reasons – they may think they are too young and therefore an estate plan is not necessary, there aren’t enough assets to warrant an estate plan, the expense for an estate plan is high, or they simply want to avoid thinking about what could happen.  However, a comprehensive estate plan can accomplish a lot in ensuring that the family is taken care of.

Identifying a guardian for minor children

While a discussion about who is to take over guardianship of the children if both parents are deceased may be common, it may be a hard thing to put into writing.  By identifying a guardian for minor children, parents can designate a person who will raise the children in a manner acceptable to them.  Thinking about a possible guardian forces the parents to consider various factors (religion, life style, family dynamic) which they will include in their final decision.  Finally, identification of the guardian leads to parents discussing this situation with the potential guardian, which ensures all parties are in an understanding with each other.

Assets of minor children

An estate plan can designate a person or manner to manage the assets left to minor children.  Failure to do so may lead to a court intervention, where the court manages the estate funds.  Usually, these assets are released from court’s supervision once the child becomes an adult.  Parents may avoid this situation by creating a trust, and spelling out its terms.  Terms of the trust would then dictate how the assets would be managed, invested, and distributed.  The trust may have provisions for allowing distributions for child’s education, health, or general support.

Naming an executor

When developing an estate plan, an executor of the estate is identified.  Usually, the executor is the spouse, but another party should be identified as well, in case both spouses die simultaneously.  Executor is a person who is responsible for handling final financial affairs of the deceased – they gather and distribute the assets, and pay remaining bills.

Planning for disability

Estate plan can also include “Power of Attorney” documents which set out how the financial and health related decisions should be made on behalf of a disabled person.  Financial power of attorney designates a person to take over the finances in an event of a disability.  Healthcare power of attorney gives another the power to determine the best course of medical treatment on your behalf.  

While it is unlikely that these documents will ever be necessary, they are important.  They spell out your wishes and desires, and may shield your family away from making difficult decisions on their own.  Small amount of planning now can go a long way towards providing the peace of mind knowing that your family will be taken care of.