When you welcome a child into your family, you want to believe that you’ll be there for all of their special moments, like high school graduation, marriage and the birth of their children.
Unfortunately, life doesn’t always go the way that we plan, which is one reason why it’s important for those who have kids or who are about to become parents to have an estate plan in place to actively protect their children.
There are three crucial steps that you should consider if you want to optimize the protections that your children have in the event that something happens to you while they’re still young.
Pick an appropriate guardian, and talk to that person
Your age, your relationships and the life circumstances of the people that you are closest to will all influence who is best situated to serve as guardian for your children. When making a selection, it’s important to look at a person’s capabilities and their relationship with your kids. It is equally important to get their approval before you name them in your last will. Naming a guardian who won’t accept the responsibilities in an emergency is as bad as naming no one at all.
Plan to help cover the living expenses for your children
When structuring your estate plan or purchasing life insurance, you need to think about the resources that your children will need if something were to happen to you. Purchasing enough life insurance is often important, as those funds can ensure that your children’s needs are met after you die. Properly saving or investing a portion of your income is also a smart step.
Consider creating a trust to hold assets other than life insurance
If you have significant resources or a stable income, you may want to set something aside for when your children are old enough to go into business for themselves or pursue higher education.
Although earmarking certain resources for use when your children are young will benefit them and their guardian, protecting certain assets by using them to fund a trust will ensure that your children will have something to remember you by and that you will have an ongoing impact on their lives even once they become adults.
Unique family and financial circumstances can sometimes influence which estate planning decisions are best for your family. Getting advice and taking action sooner rather than later is typically a smart move for estate planning as a parent.