For parents in their 20s, 30s and 40s, estate planning can easily end up at the bottom of the to-do list. Between raising children, building a career, paying a mortgage, saving for college and managing the countless responsibilities of everyday life, thinking about what would happen if you were no longer here can feel uncomfortable.
But estate planning is not really about preparing for the worst. It is about making sure the people you love most are protected if the unexpected happens.
For parents, one of the most important parts of an estate plan is arranging their children’s care, support and financial future. A thoughtful estate plan can help answer important questions before a crisis occurs, including who would raise your children, who would manage their money, and how your children would receive an inheritance.
At McManus Estate Planning, LLC, we help families throughout Cape Cod, Plymouth and Southeastern Massachusetts create estate plans designed around their individual goals, values and family circumstances.
Why Estate Planning Is Important for Parents With Young Children
Many young parents assume they can handle estate planning later in life. After all, they may not consider themselves wealthy or have accumulated significant assets yet.
However, estate planning is about much more than wealth.
If you have children who depend on you, you already have an important reason to create an estate plan. If both parents were to die unexpectedly, someone would need to step in to care for the children. Someone would also need to manage any money or property left for them.
Without proper planning, the courts may ultimately make these decisions.
Creating an estate plan allows you to express your wishes and establish a framework for your children’s care. It can provide valuable direction during an already incredibly difficult time.
Choosing a Guardian for Your Children
One of the most important, and often most emotional, decisions parents make during estate planning is choosing a guardian.
A guardian is responsible for caring for a minor child if the child’s parents are unable to do so. Depending on the circumstances, a guardian may make important decisions concerning the child’s education, healthcare, living arrangements and general well-being.
Choosing a guardian is about more than simply identifying your closest relative. You may want to consider who shares your values and approach to parenting and who would provide your children with a stable, loving home.
Ask yourself:
- Who has a close relationship with our children?
- Who shares our values and parenting philosophy?
- Would this person provide a stable home?
- Could your children remain connected to their school, friends and community?
- Does this person have the time and ability to raise children?
- Would our children feel comfortable living with this person?
- Would this person respect our wishes regarding education and healthcare?
There may not be one obvious answer, and parents may not immediately agree. These conversations can take time, which is another reason to begin estate planning before an emergency occurs.
Naming your first-choice guardian is important, but it is also wise to consider what would happen if that person could not serve. Naming an alternate guardian adds another layer of protection to your estate plan.
Guardianship and Managing Money Are Not the Same Thing
Parents sometimes assume the person raising their children should automatically manage their children’s inheritance. However, these responsibilities can be separated.
A guardian focuses on the child’s care and upbringing. Someone else may manage financial assets.
For example, you may have a relative who would be a wonderful guardian but another trusted individual who has more experience managing finances and investments. Separating these responsibilities can allow you to choose the people best suited for each role.
Why a Trust Can Be Helpful for Children’s Inheritance
A will can be an important part of an estate plan and may allow parents to express their wishes regarding guardianship. However, a will-based plan may not offer the same flexibility as a properly drafted trust for managing assets for children.
A trust can allow parents to establish instructions for how inherited assets should be managed and used for their children’s benefit. Rather than leaving assets outright to a child at a young age, parents can establish a trust and select a trustee to manage those assets according to the terms of the trust agreement.
Depending on the structure of the trust, provisions may address expenses such as education, healthcare, housing and other needs. The trust can also establish guidelines for when and how a child receives inherited assets.
What Happens When Your Child Turns 18?
For parents, one of the biggest concerns with leaving assets directly to a child is that reaching legal adulthood does not necessarily mean a young person has developed the financial experience necessary to manage a substantial inheritance.
A trust can provide a framework for accomplishing those goals. Instead of simply transferring assets outright, parents can work with their estate planning attorney to establish terms that reflect their family’s particular circumstances.
Choosing the Right Trustee for Your Children
If you create a trust for your children, you will need to decide who should manage it. The trustee is responsible for managing trust assets and following the instructions established in the trust agreement. This is an important responsibility, so parents should carefully consider their choices.
You may choose a trusted family member or friend, or, depending on your circumstances, consider a professional trustee.
When evaluating potential trustees, think beyond whether someone is simply a person you trust. Consider whether they are organized, financially responsible, comfortable making difficult decisions and willing to follow the instructions you have established.
Estate Planning Can Provide More Than Financial Protection
A comprehensive estate plan can address more than who receives your assets or cares for your children.
Depending on the type of trust and how it is drafted, certain trusts may provide additional protections involving incapacity, special needs and asset protection. However, not every trust provides every type of protection, and the appropriate structure depends on the family’s circumstances.
This is why parents should avoid assuming that a generic online trust or one-size-fits-all estate plan will accomplish their goals. Your estate plan should be designed around your family.
Review Your Estate Plan as Your Children Grow
Estate planning is not necessarily a one-time task. Your children will grow. Your family may expand. Your financial circumstances may change. You may move, purchase a new home, start a business, experience a divorce or remarriage, or simply reconsider who you would want to care for your children.
Any significant life change can be a good reason to review your estate plan. Even if nothing major has changed, reviewing your plan periodically can give you confidence that it still reflects your family’s needs.
Estate Planning for Families on Cape Cod and in Plymouth
For parents, estate planning is ultimately about preparation and peace of mind. You cannot predict what the future will bring. But you can take steps today to ensure your children have a plan for their care and financial support if you can no longer provide it yourself.
A comprehensive estate plan may address guardianships, trusts, trustees, beneficiary designations and other important considerations. The right approach depends on your family, your assets and your goals.
McManus Estate Planning, LLC serves families throughout Cape Cod, Plymouth and Hyannis, MA, helping parents create personalized estate plans designed to protect the people and things that matter most. We have offices in Plymouth and Hyannis, MA, to serve our neighbors throughout Southeastern Massachusetts.
You do not have to wait until you are older or have accumulated significant wealth to begin estate planning. If you have children who depend on you, now may be the right time to start thinking about their future.
Your children are your greatest responsibility and your greatest legacy. A thoughtful estate plan can help you protect both. To get started, contact McManus Estate Planning, LLC to schedule a free phone call with estate planning lawyer Keith McManus to begin planning for your family’s future.