3 Reasons New Parents Should Consider Creating an Estate Plan
By Sarah Carlson, CFP®, CLU®, ChFC®
When you prepare to have your first child, the to-do list may seem endless—from purchasing a car seat to furnishing a nursery, lining up day care options, and planning for time off from work. These tasks, while sometimes stressful, are surrounded by the joy of welcoming a new life into your family.
It is far less pleasant to contemplate tasks like drawing up a will, making an estate plan, and naming any guardians to care for your child if you and your child's other parent may no longer take care of them. However, these preparations might be crucial in the unlikely event that tragedy strikes your family while your child is young. Here are three key reasons new parents should put "create an estate plan" on their to-do list.
Estate Planning Eases the Burden on Surviving Family Members
If the worst were to happen, the last thing you want your loved ones to deal with is unraveling your affairs without guidance. Even worse is fighting with other family members over money, property, or the custody of your child. By writing an estate plan, you create a clear framework for anyone handling your estate and manage the risk of inter-family disputes.
An estate plan generally consists of the following:
- A will that disposes of the testator's assets and may name guardians for minor children.
- A power of attorney who allows testators to designate someone to act on their behalf if they are legally incapacitated.
- A health care power of attorney who allows testators to name someone to make decisions on their behalf if they become unable to make those decisions.
Many estate plans also require the testator to designate beneficiaries for accounts not subject to court-supervised probate, such as life insurance policies and retirement accounts.
Estate Planning May Avoid a Court Battle
If you pass away without an estate plan and your surviving loved ones cannot agree on who should raise your child, the matter may find its way into a courtroom, where a judge ultimately decides on your child's care.
This process might be expensive and stressful for all involved, including your child, but it places a great degree of trust in the court. Although the losing party in a guardianship case has the ability to appeal, the appellate court gives significant deference to the trial judge's decision. The trial judge is better able to assess witness credibility by listening to direct testimony. This trend means that an adverse decision may be tough to overturn unless the appellant shows that the trial court abused its discretion in making a decision.1
Estate Planning Opens Difficult Conversations
You may have always assumed that if the worst were to happen, your parents or in-laws would happily step in to raise your child. But these assumptions are not always correct, and circumstances may change over time. One or both sets of grandparents may develop health problems, move away from the area, or even divorce and remarry.
By having open, candid conversations with your loved ones about your plans, their plans, and what you hope the future holds, you might learn if anyone you want to name as guardian of your child is happy to serve in that capacity.
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