New Baby? Time to Create Your Estate Plan

Estate planning is often one item that gets pushed back on nearly everyone’s to-do list. The reasons you might be delaying vary - lack of time, not thinking you have enough assets, not knowing how to start, or fear of contemplating death.

Whatever the reason for not putting an estate plan together, it is important to understand that if you just had a baby - now is the time to meet with an estate planning attorney to implement a plan.

In general terms, an estate plan is a set of legal documents that outline your wishes on how your assets should be distributed and who is responsible for your dependents, in the event of your death or legal incapacity.

An estate plan should be developed with a qualified estate planning attorney to ensure that it will work as intended and fully protect your family.

Here’s how an estate plan can you protect the newest addition to your family.

Protect Your Children

Perhaps to top reason to put together an estate plan is to dictate who will care for your children in the event you and your spouse die early or become legally incapacitated and therefore unable to care for your kids.

Your estate plan can designate someone you trust and who shares your values as a guardian of your minor children. This is the person who will essentially be a surrogate parent and raise the children through adulthood. When selecting a guardian, it is important to choose people who will be willing participants in your estate plan, who share your values and parenting philosophy, and who you trust to raise your children.

Distribute Your Things

While some assets have purely financial value, others have deep emotional attachments. Not only will a trust-based estate plan speed up - and, possibly, eliminate - the probate process, but it will save your heirs bickering, time, and money.

As you may already know, probate is the court-supervised process of wrapping up a deceased person’s affairs. This consists of multiple steps, including presenting a deceased’s last will and testament (if they had one - otherwise the probate court uses the government’s default plan known as intestacy), gathering assets, paying off debts, and distributing what’s left over to the deceased’s heirs.

Using a trust to provide specific instructions on distribution of assets can help ward off fights among surviving relatives. Additionally, special features in your trust, sometimes called lifetime trusts, also allow you to provide long-term financial stability and support for your children.

These lifetime trusts can prevent a financially immature young child from using up their inheritance.

Provide for Your Loved Ones

Beyond your children, creating an estate plan will inform your loved ones what final health care decisions should be made on your behalf in the event you become incapacitated and are unable to make decisions.

Serving as a healthcare proxy is an enormous responsibility for the person you name, but you can help lessen the burden by communicating your wishes about medical decisions.

One significant advantage of properly planning is that your intentions can be clearly stated so that your surviving family members do not have to guess what your desires are.

Find an Estate Planning Attorney

If you have experienced a recent life-event - such as a new baby, a work promotion, purchasing a home, moving to a new state, or any other milestone - you should discuss your situation with an estate planning lawyer.

If you already have a will or trust in place, it may make sense to update it to ensure it provides for your family and loved ones.

To learn how estate planning can protect you, your newborn, and the rest of your family, contact us today.

How Estate Planning Can Help You Dream About Your Future

A dream without a plan is simply a wish.

Estate planning is not just about death and taxes -- it puts you in the driver’s seat of your financial life, allowing you to set achievable goals.

It is a great opportunity to focus on the legacy you want to leave behind for loved ones, help you avoid the expense and delay of probate, as well as help you save on taxes.

Putting Your Dreams on Paper

When putting together your estate plan, think about what legacy you want to leave behind. The best way to do so is to write down your wishes.

Consider the values you want to promote through your plan.

Think about important family traditions you want to encourage or memories you want to preserve.

Rather than a dry discussion of what happens to your assets, including these wishes in your estate planning documents makes your plan relatable and more meaningful for your family.

Because you’ve passed along values and wisdom along with your wealth, a comprehensive estate plan can help you achieve the dreams, hopes, and aspirations you have for your family, even though you are no longer with them.

For your estate plan to effectively pass along your values and wisdom, it should:

clearly, state who you are leaving your assets to;
give an explanation as to why an individual is receiving a particular asset;
provide guidance about how you want a beneficiary to benefit from your assets (e.g. what “education” you intend to help with, whether or how you want to instill a work ethic, what you mean by “support,” etc.);
make sure that those assets are received by your beneficiaries at the right time to maximize their benefit, and
protect your legacy from being taken by estate taxes, creditors, predatory lawsuits, government claims or divorce.

You even have the opportunity to protect your legacy beyond your beneficiaries’ lifetimes into future generations if you want to do so.

Estate Planning Basics & Benefits

There are several benefits of developing an estate plan with your legacy in mind.

You can help the next generation become empowered to achieve competence, character, and confidence.

You can also preserve and reinforce your family’s core values and traditions.

In addition to preserving your legacy after you die, a comprehensive estate plan can provide guidance for managing your affairs if you become incapacitated and unable to make decisions for yourself.

Some basic documents that should be included in your estate plan are:

A will:

A written document that states who you want to inherit your property and names a guardian to care for your minor children or disabled family members. The use of a will as your primary estate planning strategy does require the court process known as probate.

A trust:

A legal structure which holds property for your benefit during your life and for the benefit of your beneficiaries after your death. The use of a “fully funded” trust allows your beneficiaries to avoid the costly and time-consuming process of probate.

A healthcare directive:

A written document that spells out your wishes for healthcare and end-of-life choices when you are unable to make these decisions for yourself.

A financial power of attorney:

A written document giving a trusted person authority to handle your finances and property on your behalf.

Guidance From Estate Planning Attorneys

A skilled estate planning attorney can help you make your dream a reality by communicating them through a well-thought-out estate plan.

Isn’t There Already A Law That Leaves Everything To My Spouse And Kids?

Many people think that if they die while they are married, everything they own automatically goes to their spouse or children.

They’re actually thinking of state rules that apply if someone dies without leaving a will. In legal jargon, this is referred to as “intestate.”

In that case, the specifics will vary depending on each state's law, so where you live when you die can significantly change the outcome for your family.

However, the general rule is that your spouse will receive a share, and the rest will be divided among your children.

Exactly how much a spouse will inherit depends on the state, though.

Now, it may seem like, "So far, so good." Your spouse is getting an inheritance, so are the kids.

But here are some examples of how the laws can fail many common family situations.

First off, if both parents of minor-aged children die intestate, then the children are left without a legal guardian.

Kids don't automatically go to a godparent, even if that's what everyone knew the parents had intended. Instead, a court will appoint someone to be the children's guardian. In such situations, the judge seeks to act in the children’s best interests and gathers information on the parents, the children, and the family circumstances.

But the decision is up to the court, and the judge may not make the decision that you, as a parent, would have made.

When it comes to asset division, in most cases, state intestacy law presumes that a family consists of a husband, wife, and their natural-born children.

But, that’s not necessarily the way many families are structured, and things can become legally complicated quickly.

According to Wealth Management, one analysis has 50 different types of family structures in American households.

Almost 18% of Americans have been remarried, and–through adoption and stepfamilies–millions of children are living in blended families.

The laws just haven't kept up, and absurd results can occur if you rely on intestacy as your estate plan.

Stepchildren that you helped raise (but didn’t legally adopt) may end up with no inheritance, while a soon-to-be-ex-spouse may inherit from you.

Say, for instance, a father has a will that allocates assets to his spouse and two children, then they adopt a third child.

Then, the father dies in a car accident before he's able to revise his will. In some states, because the adopted child is not mentioned in the will, she may not be entitled to any inheritance.

If that isn't worrisome enough, consider that, in some states, the law provides that an adopted child still has rights to the biological parents' assets–and the biological parents are entitled to inherit a child's wealth. (Imagine if the adopted-as-an-infant Steve Jobs had died intestate, and his biological parents demanded a share of his estate!)

Of course, with a will or trust, you can control your estate and essentially eliminate the risk of these crazy results.

What if You and Your Spouse Are Separated?

State law decides what happens to your estate if you are separated from your spouse when you die.

Much of the time, the court ignores your separation and just considers you still legally married.

Unless you have a prenuptial or postnuptial agreement, it is extremely difficult to disinherit your spouse.

Again, even if a spouse is omitted from a will, state laws might choose to give a surviving husband or wife a share of the assets.

If you are separated from your spouse, and your divorce is pending, you should definitely talk with your divorce lawyer and an estate planning attorney about your options.

Creditors Win

Intestacy provides no asset protection or preservation benefits. Without any protections in place, an estate's assets are still vulnerable to creditors, lawsuits, and others who may claim entitlement to the property.

These claims would take precedence over the statutory requirements for inheritance. In other words, the family may not receive the lion's share of the estate. They'd get the leftovers.

The best way to safeguard and pass along what you’ve worked so hard to build is to talk to a qualified estate planning attorney.

Protect yourself, your family and your assets by contacting us today.