Why estate planning is essential when you’re starting your family
Estate planning may seem like a fancy practice that only applies to people with a lot in the bank. In reality, however, it’s most important to put together a sound estate plan when you have kids.
Creating a Plan and the Associated Costs
An estate plan is essentially a way to ensure your kids are protected in the case that you and your spouse die. This plan outlines what your beneficiaries receive in terms of insurance policies and assets, and how they will receive it.
There are a few routes to take when planning, but either way, a lawyer must be involved to make sure all documents are accurate and legal. On the lower end, estate planning will cost around $1500 to have basic documents put together, which is best for the average person. For people who may have more specific concerns to plan around, custom estate planning is best and can cost several thousand dollars.
Thinking Through the Important Decisions
When your children are minors, they cannot legally handle your estate. Choosing an executor to handle the process for you is a major decision and can be the hardest part. Someone who you select to be the children’s guardian may not be the best person to handle the finances and vice versa. If someone in the family doesn’t seem apt enough to be the executor, consider a financial institution or lawyer.
Another major decision to consider is when your children should have access to the assets they would be receiving. Even though at 18 they are technically adults, many people put their estate into a trust to be accessed at a later age when they are likely to be a bit more responsible.
Avoiding Common Pitfalls
There are many things to consider when making an estate plan, like what if the person you designate as the executor doesn’t outlive you or when is the best age to hand over the assets to your kids? Create a plan B that accounts for these potential issues and make sure everything goes through a lawyer.
While it seems morbid to plan for these scenarios so early in your life, it alleviates worry and provides a clear-cut process for your family to follow in the event of a tragedy