Estate Planning For Young Families


Parents of young children often postpone estate planning. They’re busy with work and child care and school and after-school activities. Sometimes they’re simply uncomfortable talking about the “worst case” scenario.

The #1 reason parents delay is that they cannot decide on guardians for their child.

Who will rear your child if something happens to both of you? What if you’re a single parent? Like I said, “worst case” scenario. If you have not named a guardian, the court is left to make this choice without your input. If there’s any possibility that family members will disagree about who should take care of your child, the court will have to choose between them.

It is far better to name guardians now. You can easily name someone else later if things change.

So, how do you choose a good guardian? You definitely want to choose someone who is willing, loving, responsible, and, hopefully, already involved in your child’s life. Where will your child live and go to school? Are there other children in the home? What if the guardians live out of state? How will you ensure that your child will continue to see family and friends here?

In your Will, you can nominate successor guardians, in case the primary guardians have divorced or moved out of the country or if they are unable or unwilling to serve. You also can name a trusted family member or friend to advise your guardians about any of your child’s special interests or medical needs.

You may want to create a trust to protect your child from financial predators. The trustee you name will manage your child’s inheritance until a specified age. You can detail exactly how the trust assets should be used, including discretionary distributions for things like international travel, wedding expenses, help with the down payment on a first home, or perhaps a business investment. You can also authorize the trustee to distribute a certain percentage of the trust principal to your child at certain ages, which allows the child to learn how to manage money while still under the guidance and supervision of your chosen trustee.

Be sure to coordinate your beneficiary forms for life insurance and retirement accounts with your Will or trust. You don’t want to name your minor child as a beneficiary of your 401k or IRA or life insurance policy without consulting your financial advisor and your attorney.

You should also sign an Appointment of Short-Term Guardian for your child. This could be your regular babysitter or nearest family member, neighbor, or friend. In an emergency when you are unavailable, your short-term guardian can take your child to the hospital or keep them safe until the permanent guardians can be notified. This is especially important if the permanent guardians live out of state.