<\/p>\n
Young couples who welcome their first child often focus on diapers, daycare and sleepless nights. But they also face a new financial reality: They now have someone who depends on them financially and legally.<\/p>\n
In this interview, Harry Margolis, author of Get Your Ducks in a Row, discusses the estate planning steps new parents should consider, including naming guardians, setting up trusts and purchasing life insurance.<\/p>\n
Below is a transcript of the interview with Margolis, edited for brevity and clarity.<\/p>\n
Why having a child changes everything<\/p>\n
Robert Powell: So many young couples who have their firstborn are at a loss trying to figure out what to do next from an estate planning perspective. Where should they begin?<\/p>\n
Harry Margolis:This is probably one of the two classic times that people do estate planning \u2013 when they have a child and when they retire.<\/p>\n
There\u2019s usually a pretty big gap between those two periods when people probably should revisit their estate plans, but most don\u2019t.<\/p>\n
The real issue when you have a child is that you now have a dependent, someone you\u2019re responsible for. Hopefully, in most cases, parents will be around and it won\u2019t become an issue. But what happens if they\u2019re not?<\/p>\n
Naming guardians and trustees<\/p>\n
Harry Margolis: You need to do a couple of things.<\/p>\n
First, you need to name a guardian, or guardians, to step in if you and your spouse or partner aren\u2019t around. That can be a difficult choice because no one is going to be exactly the same as the parents.<\/p>\n
In some cases, it\u2019s obvious who it should be. In others, it\u2019s difficult. But you should make the choice so it\u2019s clear. You do that in your will.<\/p>\n
In your will, you name who will be guardian for your children. In most states, you can also use a side document to name a temporary guardian in case you\u2019re disabled for a period of time.<\/p>\n
Then there\u2019s the question of who\u2019s going to manage the money you leave behind.<\/p>\n
The simplest thing, especially for younger families that may not have significant assets yet, is to include a provision in your will naming a trustee to manage the funds for your child or children.<\/p>\n
If you have more assets, you might want a separate trust so you can be more flexible about the terms \u2013 when children receive the money and under what conditions.<\/p>\n
Those are probably the most important things.<\/p>\n
Why life insurance matters for young families<\/p>\n
Harry Margolis: The other thing, which is less an estate planning issue, is buying life insurance.<\/p>\n
If you\u2019re younger, you probably don\u2019t have a lot of assets yet. But you want to leave something for your children or your spouse in case you\u2019re not there.<\/p>\n
That can be very important. If you buy term life insurance while you\u2019re younger and in good health, it\u2019s usually pretty inexpensive.<\/p>\n
That may actually be more important than the estate planning itself.<\/p>\n
The estate planning documents every adult needs<\/p>\n
Harry Margolis: There are also standard estate planning documents that everybody should execute, including a durable power of attorney and a health care proxy or health care directive.<\/p>\n
Why many families wait too long<\/p>\n
Robert Powell: In your experience \u2013 and I know you\u2019ve practiced elder law for much of your career \u2013 do you find parents overlook this, or are they generally on top of it?<\/p>\n
Harry Margolis: The people who come to me are obviously on top of it, so that\u2019s part of it. I don\u2019t really have a good group to comment on more broadly.<\/p>\n
But the bulk of our practice involves the other group I mentioned earlier \u2013 people doing estate planning around retirement because so many baby boomers are at that stage now.<\/p>\n
A lot of them have documents they executed 40 years earlier that are now totally out of date.<\/p>\n
So I do think many people handle estate planning when they have children, but they often don\u2019t revisit those documents later.<\/p>\n
#parents #face #overlooked #estate #planning #risks<\/p>\n","protected":false},"excerpt":{"rendered":"
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