Estate Planning For Individuals With Children

Estate planning is important for all individuals who care about how their assets will be dispersed in the event that they pass away or become disabled. However, it is particularly important for people who are the parents of children who are minors.  How an estate is planned can have a far reaching and long lasting impact on these young children's lives.

The primary decision that a parent must make during this process is who they wish to appoint as guardian of the children. The designated individual will have the weighty responsibility of raising your kids, so it is not a choice to be made without serious thought. Once a selection has been made it should be recorded in a legal will. If this step is not taken (or if the will is not properly written) then the children will be forced to live with a court appointed guardian. I think everyone would prefer not to trust a complete stranger to make a decision that will determine the well being of their children.

Another common action that parents should consider during the estate planning process is the creation of a trust. This would place assets into a holding account for the children until they reach a certain age. In the mean time the money would be managed by an appointed individual referred to as a trustee. The trustee would periodically remove money out of the account to meet the living expenses of the children until they take control of the money. In absence of a trust, children typically gain access to the money at age 18. The obvious problem with this is that many kids are not mature enough to manage large sums of money at that point in their lives. It is important to note that professional help is typically required in order to create a trust that is valid and enforceable.

Establishing a life insurance policy is another wise option for parents to take. This is particularly important for the main wage earner of the family. In the event that this individual dies or becomes disabled the insurance funds provides a much needed source of money to provide for the family.

Estate planning is relevant to just about everyone. However, it is particularly important for individuals who are the parents of minor children. It is important that people protect their children's future by planning ahead.

This website provides only a general overview of estate planning. You should consult an attorney, or perhaps a CPA or tax advisor for additional guidance.

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