For newly married couples and those starting a family, estate planning is often thought of as something to address later in life. However, as discussed by Dan Stone, an associate in the Elder Law Practice Group at Mandelbaum Barrett PC, getting started early can provide essential protections for you and your loved ones.
Naming a Guardian for Minor Children
For current or expecting parents, one of the most important aspects of estate planning is appointing a guardian for your children in the event both spouses pass away. By naming a guardian in your will, you ensure that your child is cared for by someone you trust. Without a designated guardian, a court may appoint a guardian who does not share your values, parenting style, or long-term vision for your child’s upbringing. Additionally, family members may disagree over custody, leading to legal battles that can be stressful and costly. Planning ahead allows you to choose someone who will provide the stability, emotional support, and guidance your child needs.
The Importance of a Minor’s Trusts and Special Needs Trusts
In the event your child receives inheritance, a will can be used to establish a minor’s trust. A minor’s trust allows you to specify how your child’s inheritance should be used, designates a trustee to manage the assets on the child’s behalf, and specifies when the trust funds should be fully distributed to your child. Absent the establishment of a minor’s trust, a child’s inheritance may be distributed before they are mature enough to manage it responsibly.
For parents of children with disabilities, a will can also be used to establish a special needs trust, ensuring your child’s financial support without jeopardizing their eligibility for government benefits.
Planning for your Child’s Higher Education
A 529 plan is a tax-advantaged investment account to save for your child’s higher education. These accounts can cover tuition, room and board, and school supplies. Contributions grow tax-free, making it a valuable planning tool for your child’s academic future.
Reviewing Beneficiary Designations and Ensuring Compliance with Prenuptial Agreements
Remember: not all assets pass through your will. Life insurance policies, retirement plans, and accounts with beneficiary designations transfer directly to the named beneficiary, regardless of what your will states. Reviewing these designations is crucial to ensure they align with your overall estate plan.
For those with prenuptial agreements, some require that specific policies or accounts be maintained for the benefit of one or both spouses. Accordingly, when drafting a new estate plan, it is important to verify compliance with these pre-existing legal agreements.
Understanding the Role of a Power of Attorney and Living Will
A critical aspect of any estate plan is appointing a fiduciary, often a spouse, to act on your behalf in the event you become incapacitated. This is done through a power of attorney and living will.
A power of attorney allows a designated individual to manage your legal and financial affairs if you become unable to do so. There are two types: a durable power of attorney, which is effective immediately upon signing, and a springing power of attorney, which takes effect only if you are deemed incapacitated, potentially causing delays during emergencies.
A living will focuses on medical decision-making. It includes an advance directive, which outlines your healthcare wishes in case of a terminal illness, and designates a healthcare proxy, who is authorized to make medical decisions on your behalf. These documents ensure that your medical preferences are honored and eliminates ambiguity among family members if you require medical treatment and cannot advocate for yourself.
