People often associate estate planning with older adults. They think of those preparing for retirement or well into their golden years when they think about this process. However, younger people can also benefit from estate planning in many circumstances. For example, many young adults in their thirties or twenties who have just become parents have a very compelling reason to put together an estate plan. Specifically, they may need to take steps to protect their children if something unexpected should cause their death.
Those who are expecting a baby or who have recently added children to their families will often derive great peace of mind from establishing an estate plan. What benefits do new parents obtain from estate planning?
A designation of someone to care for their children
The most devastating aspect of parents dying is how the death of a parent leaves children without proper support. Parents provide shelter and daily guidance. Their role in a child’s life will largely determine what opportunities they have in the future and the person they become. One of the most important estate planning moves a parent can make is the designation of a trusted individual to serve as the guardian of their children. Selecting the right guardian takes careful consideration and requires that the party selected agrees to assume that authority in the event of a tragedy.
Financial clarity concerning the future of their children
Technically, children frequently have a right of inheritance under intestate succession laws. Still, those inherited assets could be at risk if they are young when their parents die. The guardian who assumes control over the child would also have control over their inheritance.
Parents who want to contribute towards college expenses or provide support for their children once they become adults will need to do more than simply designate their children as beneficiaries in a will. Creating a trust and funding it with the family home, life insurance policies and other major assets will ensure that there are resources set aside for the children. The trustee can then manage those resources until the children are adults or their circumstances meet other requirements set in the trust documents.
The comfort that comes from knowing that one’s children will have financial and social support if anything happens to their parents is truly invaluable. As a result, taking the time to create an estate plan is a smart move for those who have just become parents or are about to have a baby.