Why Estate Planning is Important When You Have Kids

December is just about here, the holidays are fast approaching, and New Year’s Eve is close at hand. Between holiday shopping, settling end-of-year expenses, or planning for 2023, this could be your busiest time of year, but one thing stays the same all year long: the importance of family.

Below is a list of reasons about getting your estate in order in the New Year, including how it’s in the best interests of your family:

Your family counts on you

Planning your estate, as well as what is going to happen to your assets and property following your passing away, is aimed to not only provide you with control over your property, but to help your family with splitting your assets after your passing.

Preparing an estate plan includes devising a Last Will and Testament, in which you can name guardians for your minor children, and ensure your loved ones are taken care of financially if something happens to you. Lacking a Will, the government controls where your property goes, despite of your wishes.

Time is invaluable

The time we spend with our loved ones is invaluable and we usually realize this throughout the holidays more than any other time throughout the year. We might schedule plans to see each other more frequently, but the reality is that everyone is busy, and when you don’t let your loved ones know how you are feeling, or what you want, it might be too late.

The unanticipated does happen

Anyone that has recently lost someone, or knows someone that has, can empathize to the fact that unanticipated events can happen all the sudden. Prepare for these events by creating or reworking your estate plans, selecting an executor, and placing your Will in a safe and secure place.

The lack of an estate plan could rip families apart over your estate. Avoid escalating the stress of your passing away or ailment by preparing your wishes and conveying them to your loved ones while you still have the opportunity.

It’s not as difficult or time-consuming as you might think

There is a common misunderstanding that planning your estate is too difficult or takes a lot of time. Nevertheless, having even a simple Last Will is better than not having one. Whereas it is a good idea to be considerate in choosing an executor or splitting up property amongst beneficiaries, you can always amend your Will or refresh it as needed.

The future is unforeseen

Each year is another period in your life. What is going to happen next year could already be planned out in your head, but financial and environmental conditions, and personal circumstances are ever changing. For that reason, it’s important to start planning whenever you have the chance.

If you’re going on a trip or vacation in the upcoming year, it’s a good idea to create a Will, or even appoint a Power of Attorney while you’re away. If you’re a small business owner, it’s good business forethought to formulate a plan of action for its future and who is going to take over business operations should something suddenly happen to you. First and foremost, if you are a parent, the care of your child and their welfare should take precedence, which includes designating a guardian to take care of them without you, in addition to providing for them financially when needed. The same holds true for owners of pets.

With a year full of adventure and hopefulness ahead of you, guarantee that if you do devise an estate plan, update it as required to reflect certain life changes, such as getting divorced or having a baby.

It’s the most vital resolution you can make

Even though the end of the year is busy, it’s also when a lot of people reflect over the last year and resolve to improve in the upcoming year. When you are at your most contemplative time, may be the ideal chance to give your estate some considerations and arrange your assets.

When visiting your family these upcoming holidays, consider what is most important to you and make a resolution to create an estate plan in 2023.

New Year’s Estate Planning Checklist

Planning for your future is not always high priority for younger families. When you’re trying to control a toddler, planning further than next Wednesday can feel like an exercise in pointlessness. Estate planning, on the other hand, means that should anything happen to you, your family is safeguarded. Having basic documentation in place might be able to help you minimize or bypass probate completely for your family. Lacking an estate plan, you don’t govern how your assets are going to be allocated, or who is going to care for your children. Below is an estate planning checklist that everyone should think about to guarantee that their wishes concerning their children and assets are acknowledged and adhered to.

Evaluate Life Insurance Needs

A good place to begin is with life insurance. If you were to pass away today, could your family cover all your monthly expenses? Is there additional money for unanticipated costs? Would your children have enough funding to be able to go to college someday? Clearly, you want your family to be able to get by should something happen to you. Begin by evaluating your family’s monthly expenses and long term financial objectives to establish how much life insurance you require. Then, figure out what kind of insurance policy is going to meet those requirements.

Establish if You Need a Will, a Trust, or Both

Basic Will

A will is a public record, and available to everyone. For many younger families, a basic will might be enough to sufficiently safeguard your family if anything were to happen to you. There are several things that you can designate in a will:

Appointing a guardian for minor children
Determine asset allocation
Name an executor or trustee for your estate

Whereas a will is somewhat easy and cost effective to set up, your estate is probably still going to have to go through probate. Through probate, your assets are going to be held prior to allocation, occasionally for months. Also meaning that creditors and any attorney fees are going to be paid prior to any money passing through to your heirs.

Trust

A trust, contrary to a will, is private documentation that keeps your affairs out of the public record. A trust might work better for people who have tangible property — land, homes, businesses, etc. — that would be required to be transferred upon your passing away. Creating a trust is a little more complex and more expensive than a will, but it enables your estate to bypass probate and have your assets pass straight to your heirs, in accordance with your directive. Trusts do not enable you to appoint a guardian for minor children nevertheless, so even when you set up a trust, you might still require a will to designate this.

Consider Other Documentation

Durable Power of Attorney provides an individual with the ability of making decisions for you if you become unhealthy or debilitated in any way.

Medical Care Power of Attorney or a Healthcare Directive designates a person of your choosing to make healthcare related decisions for you, if you become ill or unable to, in other respects convey your desired healthcare treatment(s).

Devise an Asset List for Your Executor or Trustee

It’s wise to have all of your assets organized so that your executor or trustee can more effectively manage the allocation of your assets. Organized documents are going to assist your executor or trustee in finalizing financial and legal arrangements in a timely manner.

Real assets: House, vehicle, jet ski, etc.
Financial assets: Investments, savings, etc.
Retirement accounts
Insurance policies

Be sure that your executor or trustee knows how to track down these documents should they need to carry out that role.

Examine Your Documents Frequently

After a while, there might be things you need to alter or include in your estate plan. It might even become required to carry out a trust, adjust beneficiaries, or designate a new executor or trustee. You don’t need to examine your arrangements each year, but you should review every 3 to 5 years, even when you don’t go through significant life changes throughout that time. You should also examine your arrangements any time you experience a considerable shift in your situation, like a change in marital standing, a new baby, or a change of ownership of a home or business.

Source:

DeSmit, K. (2019, January 30). 6 reasons to start estate planning in the New Year. LawDepot Blog. Retrieved November 15, 2022, from https://www.lawdepot.com/blog/6-reasons-to-start-estate-planning-in-the-new-year/

Attorney Arizona

There’s nothing better than the peace of mind you will have knowing you’ve protected your family at a time when they need it most. Let us help. Schedule a consultation or contact Ogborne Law, PLC of Arizona today.