Estate Planning
Important for New Parents
Having a child is both a joyous and challenging experience. Months of planning culminate on that special day when a new member of your family finally arrives. Preparations such as the purchasing of clothes, furniture, and other baby items are rather obvious and enjoyable tasks. However, there is a crucial piece of planning that is often overlooked by many expectant and new parents. No matter a parent’s age, health or financial status, having a properly drafted estate plan is vital.
A common misconception is that a Will merely directs the distribution of your assets upon your death. In reality, a Will may, and most often does, contain many other instructions to be carried out in the event of your passing. Most important to you, as an expectant or new parent, is the care of your children.
Obviously, if you were to pass, your spouse would have sole responsibility over your children. However, in the unfortunate event that you both passed, whom would you want to raise your sons or daughters? Making that decision is only the first step; ensuring that it is carried out is another. The latter is done through the preparation of a Will.
If both you and your spouse were to expire leaving minor children without having made Wills that include appointments of guardians, the decision as to who will care for your children until they become adults may be left to the courts.
This possibility is a troublesome proposition when you consider that a court will have no knowledge of your personal relationships and preferences. In the absence of a Will, family members receive a preference as to guardianship. But what if, instead, you have a close friend you would prefer to raise your children? Also, your closest relatives (often your children’s grandparents) may not be the persons you would choose to raise your children, preferring instead, for example, a sibling or cousin. The matter can be further complicated when relatives are put into a position to “fight” for custody. What if both sets of grandparents apply for custody? While everyone may have good intentions, that situation could escalate into a battle between families.
All the above questions could be answered and the above pitfalls avoided with the drafting of a Will. Along with provisions relating to the distribution of your assets, a Will can appoint individuals to serve as your children’s (and even your pets’) guardians. It can also establish a trust into which your children’s inheritance can be placed until they are responsible enough to manage it on their own.
Obviously, as minors or even young adults, your children may not be ready to manage the assets you have left for them. By establishing a trust in your Will, you can direct when they will receive those assets and, in the meantime, the manner in which they can be used. Your Will will also appoint a trustee who is responsible for carrying out the terms of the trust and the managing of its assets. While your Will can appoint the same person as guardian and trustee, often different individuals are better suited for different jobs, and, in such cases, many parents appoint different persons to act as guardian and trustee. Given the above, it is easy to understand why these simple, yet important, Will provisions should not be overlooked.
In addition to a Will, expectant and new parents may also want to consider drafting a Durable Power of Attorney. In a power of attorney, an individual grants another person the power to act on his or her behalf in matters both legal and financial in nature. A Durable Power of Attorney remains in effect even if the grantor becomes mentally incapacitated. This is an important feature if you consider that the alternative would be to bring a costly and time-consuming incapacity matter.
In an incapacity matter, someone files a legal claim to declare an adult person mentally incapacitated and to have a guardian appointed for that individual. A Durable Power of Attorney allows you to designate an individual you trust to handle your financial and legal affairs when you cannot. While, in most cases, an individual’s spouse or partner is the first choice to act in this role, this document allows you to designate successors should he or she be unable to serve, keeping another important decision under your control rather than that of a court.
Another important estate planning document is an Advanced Health Care Directive or Living Will. There have been a number of high profile cases where families have been torn apart over disagreements concerning the care of a loved one. An Advanced Health Care Directive or Living Will helps to avoid such fiascos both by stating your preferences concerning life-sustaining measures and by designating an individual to make medical decisions on your behalf should you be unable to do so. Of course, no document could attempt to state your care preferences for all medical conditions you may face. However, the Advanced Health Care Directive states your general preferences and assures that the person in charge of your health care decisions is one that you trust intimately. Much like the Durable Power of Attorney, in most cases an individual’s spouse or partner is the first choice to act in this role but, again, this document allows you to designate successors should your spouse or partner be unable to serve.
When you cannot, a Will, a Durable Power of Attorney and an Advanced Health Care Directive express your wishes and provide answers to questions on your behalf. They ensure that your children are cared for by those you wish to do so, and that any assets you may leave them are managed in the manner you desire. These documents should also alleviate stress and possible discord among your remaining family. For these reasons alone, the importance of having estate planning documents in place should not be overlooked.
This article is for informational purposes only and does not constitute legal advice or an attorney client relationship.