Estate Planning for Your Younger Family.
DID YOU KNOW: According to AARP alone in the United States, only 24% of 18-to-34-year-olds and only 27% of 25-to-54-year-olds have a Will
Estate planning is often thought of as something only older individuals do. However, this is a misconception that can have serious consequences for young families.
If you have minor children, you should not wait to establish a proper estate plan. Everyone hopes to be around long enough to raise their child or children into adulthood, but sometimes life has other plans.
The only way to ensure the security of your family is with comprehensive estate planning developed with the assistance of an experienced attorney. In this blog post, we'll explore crucial steps that young families should take, to ensure a secure future for all.
The consequences of failing to plan:
The arrival of a child is a turning point in parent's lives. A new chapter begins, and along with it comes several responsibilities. With new members of the family, planning for your assets becomes a necessity. We all know that life is unpredictable and no one knows what might come your way tomorrow, next week or next year.
If you die without a will or without having an estate plan, your assets will likely go through the probate process, which can be costly and time-consuming. Florida law will decide how your assets are distributed, and the fees and expenses associated with probate will be deducted from your estate, reducing the amount that goes to your loved ones.
Additionally, suppose you and your spouse die simultaneously without naming a guardian for your children. In that case, the court will determine who will take care of them, potentially causing further stress and uncertainty for your family.
So the question becomes who will look after your kids if something happens to you and how will your assets be distributed among your loved ones without any disputes?
In such cases, it becomes very important to have a valid will or trust in place so that your family will be cared for. Let's have a look at the 5 steps you need to take before you set an estate plan for your younger family.
1. Drafting a Will
One of the most important aspects of wealth management and planning for young families is drafting a will.
A will is a legal document that outlines your wishes regarding the distribution of your assets and nominates the guardian of your children. You should indicate who you would prefer to raise your child or children in the event of your passing.
In Florida, you can nominate a guardian of minors in your Last Will & Testament If there are two parents, each parent should have his or her individual Will and name the other parent as guardian first. Each parent should also nominate a backup or successor guardian if the other parent cannot serve.
A Last Will & Testament also allows you to name an executor, or personal representative, who will be responsible for carrying out your wishes and ensuring that your assets are distributed according to your instructions.
Understanding When to Deposit a Last Will & Testament with the Court in Florida
Choose Your Guardian Wisely:
When creating a will, it is essential to designate a guardian for your minor children. This decision should not be taken lightly, as the guardian will be responsible for raising your children and making important decisions on their behalf.
If both parents pass away or become incapacitated, having a guardian in place ensures that your children will be cared for by someone you trust. With a designated guardian, the court will appoint someone with knowledge of your preferences and your children's best interests. By including a guardian designation in your estate plan, you can have peace of mind knowing that your children will be in good hands.
As a Personal Representative, let's read what are your Responsibilities and duties.
2. Consider Establishing a Trust
In addition to a will, young families may benefit from establishing a revocable living trust. A trust allows you to set aside assets for your children's benefit to be managed by a trustee until they reach a certain age or milestone of your choosing. You can dictate the terms of when your child or children are to get distributions from the trust.
The trust can provide that funds may be used to:
- Provide for the health, education, maintenance
- Support of the minor child or children until they reach a certain age.
Upon reaching a certain age or milestone, you can instruct your trustee to distribute a fixed portion of the assets in the trust to the child.
For example, you can instruct the trustee to distribute a portion, say one-half, of your trust assets to your child at the age of 21 and then the remainder outright at 30.
This ensures that your children's inheritance is protected and managed responsibly, rather than being distributed to them outright when they turn 18.
Creating a trust ensures that your assets are distributed according to your wishes and also avoids the probate process.
Why a Revocable Living Trust is Important:
Without a comprehensive estate plan, the distribution of your assets will be determined by state laws. Thus, by creating a will or trust, you control how your assets will be distributed, ensure that your children receive their inheritance in a way that aligns with your values and goals, and select the guardian to best raise them in the event you are unable.
Administration of a Trust in Florida can be particularly useful for financial assets, real estate, and life insurance. You can specify how and when your children will receive their inheritance, providing them with financial security while also protecting their assets from irresponsible spending
3. Name a Personal Representative and Consider Powers of Attorney:
When creating your estate plan, it is important to name a personal representative, also known as an executor, who will be responsible for administering your estate and carrying out the instructions in your will. Choose someone you trust and who has the necessary organizational and financial skills to handle the responsibilities. In addition to naming an executor, it is also crucial to consider powers of attorney.
- A Durable Power Of Attorney:
A durable power of attorney allows you to appoint someone to make financial and legal decisions on your behalf. This person will have the authority to manage your finances, pay bills, and make important financial decisions on your behalf.
- A Designation of Healthcare Surrogate:
Similarly, a designation of healthcare surrogate allows you to select someone to make medical decisions on your behalf if you are unable to do so.
- A Living Will
A Living Will is an advanced directive in which you make your wishes known concerning the withholding or withdrawal of certain life-prolonging procedures under very limited, specific circumstances. This document can provide clarity for your family and medical professionals and also ensures that your healthcare decisions align with your values and beliefs.
4. Estate Planning Documents: A Quick Comparison
| – | Durable Power of Attorney | Living Will | Designation of Healthcare Surrogate |
|---|---|---|---|
| Purpose | Manages finances, legal matters, and property | Specifies your wishes for medical treatment if you become terminally ill or permanently unconscious. | Designates an individual to make health care decisions for you when you’re unable. to provide informed consent. |
| Becomes Effective | Upon signing | When you’re unable to provide informed consent to treatment. | When you’re unable to make your own healthcare decisions. |
| Scope | Broad, based on the specific powers granted to the agent. | Limited to end-of-life care decisions and specific treatment preferences. | Limited to health care decisions. |
| Key Components | Identification of the agent, backup agent (if any), powers granted, effective date, any restrictions, and revocation process. | Treatment preferences, life-prolonging measures, pain management, organ donation. | Identification of the surrogate, backup surrogate (if any), powers granted, effective date, and any restrictions. |
| Legal Requirement After Death | Terminates upon the principal’s death. | Terminates upon the principal’s death. | Terminates upon the principal’s death. |
5. Special Considerations for Blended Families and Previous Relationships
If you have a blended family or children from previous relationships, estate planning becomes even more crucial. Without a carefully designed estate plan, your assets may not be distributed according to your wishes, potentially leaving some of your children with no inheritance. By working with an estate planning attorney, you can address the unique challenges of estate planning for blended families and ensure that your assets are distributed in a way that aligns with your intentions.
As your family and financial situation evolve, it's important to regularly review and update your estate plan. Life events such as the birth of a child, marriage, divorce, or changes in financial circumstances may require adjustments to your plan. By staying proactive and keeping your estate plan up to date, you can ensure that it continues to reflect your wishes and provides for the needs of your family.
Make sure to revisit your will, trust, and beneficiary designations to ensure they accurately reflect your wishes regularly. Consulting with a professional estate planning attorney can help ensure that your plan remains up-to-date and aligned with your goals.
Conclusion:
Regardless of your age or family dynamics, estate planning is a crucial step in protecting the future of your loved ones. By creating a comprehensive plan that includes guardianship designations, asset distribution, healthcare directives, and trusts, you can know that your children will be cared for and your assets will be distributed according to your wishes. Consult with an experienced estate planning attorney to ensure that your plan is legally sound and tailored to your specific needs. Estate planning is an essential tool for young families to secure their family's future.
