When most people start family planning, they consider buying homes, picking the right schools and choosing a health insurance plan. An important but often overlooked consideration is estate planning. An estate plan typically involves a will, trust and power of attorney.
If you are unsure of where to start, make a simple will. A will can help you dispose of your assets as well as appoint caregivers for your children. Be sure to include who you would like to become guardians of your children. You don’t need to settle on one person or couple. Some people are great with money but not very kid-friendly while some people are the entire package. You can appoint one person responsible for the “person” or physical custody of your child and another to be responsible for your child’s financial needs or “estate.”
A trust is a more sophisticated way of dealing with assets that would go into a will. A trust can be for an individual or both spouses. They can also be changed or revoked anytime during your lifetime. Trusts usually become irrevocable at death. Under a trust your property transfers to your chosen beneficiaries. A fully funded trust enables you to dispose of your assets and provide for the well being of your children and other beneficiaries by avoiding the expense and time of the probate courts. There are many types of specialized trusts, and an attorney can help you find the one that best fits your circumstances. For example, if you have a child who is disabled, you might consider setting up a special needs trust.
A power of attorney is also a useful tool that can make life easier for those who will take care of you in your later years. A power of attorney allows another person to make medical, financial and social decisions for you in the event you lose your ability to do so yourself. Having one in place can help you avoid having to seek a conservatorship in the probate or mental health court, and can make the transition more efficient for your caretakers. Thinking about how you want to care for your children or distribute your assets in the event of your death is something most people wait too long to consider. Starting on these tasks earlier in life ensures your wishes are met and that your children are not overburdened at an inevitably stressful time.
Finally, remember to keep the documents in your estate plan updated. Try and update your plan every three years at the minimum because your family, assets, laws and goals may change.
My name is Attorney Tamiel Holloway. I am licensed to practice law in California, Massachusetts and New Mexico.
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This article is based on the opinion of one practitioner. It is recommended you seek the advice of an attorney as you begin your estate plan.