Estate Planning for Parents
The miracle of child birth can bring many unexpected surprises to light such as realizing how expensive baby formula is, how you really shouldn’t reuse diapers, and how financially draining a babysitter can be. Aside from the many adjustments you will need to make on a personal level, comes the realization that you are no longer responsible just for yourself anymore. With a new member in the family, now is the time to create an estate plan that will provide a financial foundation of certainty. Here is a short list of four items to consider when creating your estate plan.
- Write an Ironclad Will
As a young parent, you are probably not in a position where you have a long list of assets. You may be under the assumption that the main purpose of a last will and testament is to simply to transfer assets at the time of your death. Although the conveyance of property at death is the main reason why you should you have a will, another significant aspect is the ability to nominate a guardian for your young children. A last will and testament is the only document in which you can nominate a guardian and have the judge take your selection into consideration. In the event of untimely death, a guardian is an individual who will watch over your child until they reach the age of majority (age of majority is 18 in New York State).
If at the time of death you do not have a will, or you have failed to designate a guardian for any minor children in your will, the court will appoint a guardian after considering factors in the best interests of the child. This can pose as a serious problem because the court system may not know all of the intimate details about members of your family whom you would never trust to take care of your children.
In the event that you accumulated substantial assets during life, be mindful that with a last will and testament your estate must pass through the unavoidable and somewhat lengthy probate process. The system of probating a will is essentially the Surrogate’s Court verifying the validity of the will and ensuring that assets are properly distributed to the rightful beneficiaries. In order to avoid probate and have the property pass to the beneficiaries in a haste manner, the preparation of a trust is recommended. However, a trust should always be accompanied by will if there are minor children as a will is the only estate planning instrument that allows you to nominate a guardian.
- Purchase a Life Insurance Policy
The retention of a life insurance policy is not a legal task but more of a financial planning move. Life insurance is a great hedge to ensure your family will have some financial stability at the time of your passing. The two main forms of life insurance are whole life and term life. If you are relatively young, term life is an option many people opt in for because of its inexpensiveness and peace of mind. Depending on your age and health, term life can cost as little as $60.00 a month for a $1,000,000.00 policy. A benefit of life insurance is the associability of cash to the surviving spouse and the children of the deceased. A major downside of probate is the length of time associated with the process. In the case of death where money is needed for funeral arrangements and the upkeep of the assets, such as maintenance payments on a co-op, the probate or the administration (no will) of the estate will take a minimum of seven month before any money is distributed to the beneficiaries or heirs of the decedent. Life insurance proceeds provides security while the estate is pending probate.
- Prepare a Durable Power of Attorney and a Living Will
A living will, or otherwise known as an advance medical directive, sets the terms for how your end of life care should be handled. You can dictate if you wish to be provided with pain relievers, or prefer not to be resuscitated. With a living will, you take control of how those acting on your behalf should treat you in your vulnerable condition.
With a durable power of attorney, you give authority to another individual to handle your finances in your state of incapacitation as well as deal with advanced medical directives at your behest. If estate planning can be summed up in one simple sentence, it is the advanced planning you make to ensure that your finances and medical needs are handled in such a way that is solely pre-approved by you. A living will and a power of attorney are two essential tools necessary to ensure that you still have a say in your finances and well being in the event that you cannot voice your approval or objections.
If you have children and you subsequently become incapacitated – financial needs such as paying for tuition can easily be addressed by a power of attorney. Through the use of a power of attorney, an individual hand picked by you can lawfully access your banking information in order to ensure you’re your financial obligations are being met.
- Considering Drafting a Trust
There many different type of trusts available to one person depending on the underlying purpose of the estate plan. Some of the most popular trusts include Testamentary trusts, Inter Vivos trusts, Supplemental Needs trusts and Medicaid Asset Protection trusts. The implementation of trusts in estate planning can provide tax incentives, creditor insulation, and a measure of control in assets management for loved ones with reckless spending habits or incapacitated conditions. The major upside of a trust is the efficiency associated with transferring assets upon death and the ability of the grantor (person establishing trust) to set terms and limits on the distributions for decades after death.
Hire an Estate Planning Lawyer
It is crucial and recommended to sit down with an attorney, specifically an estate lawyer, to examine the benefits of every available estate planning tool at your disposal. The reason why using estate planning software isn’t recommend is simple: you did not go to law school or deal with dozens of estate cases which groomed you to assure simple mistakes will not be made. Consider contacting an estate lawyer prior to plunging into the creation of your estate plan. Call Mishiyeva Law, PLLC., today for more information. Our number is (646) 233-0826 and our office address is 85 Broad Street 18th Floor, New York, NY 10004.