Young Parents Need Estate Plans
Most estate planning clients begin estate planning after they reach middle-age or retirement ages and their children have reached adulthood. Ironically, young parents have much to lose by failing to plan than do people in in these later life stages. This article explains why young parents need to make estate plans more urgently than the older generation that raised them.
Planning for Childcare
People often express concerns about avoiding problems that might occur after their deaths. Thoughtful young parents often worry about who will raise their children if the parents die before their children reach adulthood.
In those cases when children lose both parents, loving family members often rally to care for the children. Young parents usually do not question whether family members would have their children’s best interest at heart. The big concern for most young parents is whether caregivers will pass the parents’ values to the children about spirituality, education, health, fitness, work ethics, compassion, and healthy relationships.
Planning for Financial Management
A child’s tragic loss of parents stirs most people’s emotions. It does not diminish the tragedy, but reasonably responsible parents often hold life insurance policies and establish basic plans that enable people to care for their children. Most states also have laws that protect orphaned children.
Statistically speaking, it is much more likely for one spouse to die and the other spouse to require extensive medical treatment than for both husband and wife to die in a single mishap. Serious parental disability can be a much more distressing tragedy for some young children than the consequences of the parents’ deaths.
If injury or illness disables one or both of a child’s parents, the disability may deprive the child of many or all benefits of parental relationship as if the parents had died. Parental disability can trigger financial chaos that compounds and deepens a child’s tragedy even more than the unspeakable loss following a child’s parents’ deaths. In that case, the parents’ income may end, life insurance policies will not provide the relief of death benefits, and the parents’ problems can consume household wealth rapidly.
6 Planning Questions for Parents
We encourage young parents to devote at least as much thought about disability as the gift to plans for their untimely deaths. Parents of young children should prepare to answer six preliminary questions about their estate plan objectives:
- Who will take care of the children if at least one parent survives, but is disabled?
- What financial resources will sustain the family if a surviving parent is disabled?
- Who will manage the household’s legal and financial business as a fiduciary if a surviving parent is disabled?
- Who will service healthcare representative to make healthcare decisions for the children and parents if a surviving parent is disabled?
- Who will raise the children (as “guardian of the person”) if both parents are deceased or fully disabled?
- Who will oversee the parents’ estates and manage life insurance proceeds and other assets for the children if both parents are deceased?
Have Backup Plans
We also believe that pessimism is an estate planner’s virtue, because planning becomes worthless if “Plan A” fails and there is no “Plan B” or “Plan C.” For example, a primary candidate to raise the children could suffer a serious health or financial setback that would prevent them from carrying out their responsibilities. Therefore, we encourage estate planning clients to consider at least one alternative candidate to fill each role in the answer to each of the six questions about candidates to take care of our clients and their children.
They say youth is wasted on the young, but it can also be said that wisdom often arrives too late. Wise people try to plan effectively for all stages of life. Wise young parents plan their estates early and update their plans often.
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Jeff R. Hawkins and Jennifer J. Hawkins are Trust & Estate Specialty Board Certified Indiana Trust & Estate Lawyers and active members of the Indiana State Bar Association and National Academy of Elder Law Attorneys. Both lawyers are admitted to practice law in Indiana, and Jeff Hawkins is admitted to practice law in Illinois. Jeff is also a registered civil mediator, a Fellow of the American College of Trust and Estate Counsel and the Indiana Bar Foundation; a member of the Illinois State Bar Association and the Indiana Association of Mediators; and he was the 2014-15 President of the Indiana State Bar Association.
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