When you have children, your life is changed forever. In such cases, estate planning is no exception. All too often, many young parents do not take the time to create an estate plan that has provisions for the recent additions to their families, for various reasons. Although estate planning may never be thought of as a pleasant task, it is a necessary one that will ensure that your children are taken care of if something unexpected happens to you.
When you are a young parent, you may have few assets and think that writing a will is unnecessary. However, at this stage in your life, a will is less about transferring your property and more about naming guardians for your children. A guardian is the person who would raise your children in the event of the death of you and your spouse.
If you do not have a will in place in such a circumstance, the decision concerning the guardianship of your children would be left up to the court. Without a will, the court would not know your values and child-rearing philosophy, so your children may be placed with someone that you would not approve of.
When choosing a guarding for the children, it is important to consider the ability of the person to effectively raise them. For example, a young child may be too much of a burden for an elderly grandparent. It is also helpful to name a person to serve as an alternate guardian, should your original choice be unable to fulfill their responsibilities.
Management of finances
In addition to naming guardians, estate planning can also address the issue of who will manage the children’s share of the inheritance (until they come of age) should you and your spouse die. In this case, a testamentary trust can be a valuable tool. This type of trust is formed in the event that you and your spouse die. Upon your death, your assets are transferred into the trust and are managed by a trustee of your choice. Trusts allow you a great degree of flexibility with regard to how your assets are distributed. As a result, you have the ability to specify when your children receive distributions and what the distributions are to be used for (e.g. educational or medical expenses).
Distribution of assets
Of course, it is important for young parents to have an estate plan to ensure that their assets are distributed according to their wishes. Without a will or a trust, under Colorado law, your assets will be supervised by the court and distributed to your children in equal shares once they turn 21.
Although this arrangement may meet with your approval, it fails to address the fact that each of your children has their own financial needs. For example, one of your children may have medical needs that heighten his or her need for financial support compared to your other children. Estate planning gives you flexibility in the distribution of your assets, which would allow you to address any special needs.
An attorney can help
Finding the best legal means of carrying out your wishes is a complicated process. Because of this, it is well advised to consult with an experienced estate planning attorney. An attorney can ensure that the necessary documents are in place to ensure that your children adequately provided for.