I recently wrote an article about estate planning for young families. Here is a link to the article on the Kuhn Rogers website. The article in full is as follows:
Why Young Families Should Start Now
By: Christopher G. Rogers, Attorney
Every young family can benefit from having an estate plan. Beginning that process now can provide peace of mind for years to come. To start, you should focus on the following questions:
Who would care for your children if you were unable to do so?
How would your spouse or children be provided for?
Who will make decisions for you if you cannot?
An estate plan provides answers to these questions and typically addresses the following three stages: lifetime, disability, and death.
Without an estate plan, the management and disposition of your estate would be determined by the probate court according to Michigan law or a set of default rules known as the laws of intestate succession. To avoid relying on the default set of laws, you should implement an estate plan that is specifically prepared for your family’s needs.
Where to begin?
Your first step should be to meet with a trusted estate planning attorney to discuss your family’s situation and obtain personalized estate planning advice. The following are some of the most important planning decisions to discuss.
1. Execute a will and name a guardian for your minor children.
A will is used to name the guardian of your minor children if you and your spouse are unable to care for them. Also, it overrides the default state laws and provides for the disposition of your assets pursuant to your specific wishes.
Selecting a guardian is the most important decision you will make. No one will be able to replace you as parents, but you should carefully consider the values of the individuals you are naming as guardians.
2. Consider life insurance.
If your family is just beginning to save while paying off debt or if you rely on one spouse’s income, then there would be little or no assets left to support the surviving spouse or children if one or both of the parent’s died. The advantages of purchasing life insurance are that it is relatively inexpensive, can be maintained during your primary earning years, and can create an estate to provide for your children’s support and education in the event you pass away before they become adults.
3. Establish a trust and name successor trustees.
Like a will, a trust provides for the disposition of your assets different from the default state laws. A trust has the added benefit of being in effect throughout your lifetime, upon your incapacity, and at death. Additionally, a trust avoids probate unlike a will.
Even if you do not currently have assets to fund into a trust, it can receive funds, such as life insurance proceeds, in the future. You can name a successor trustee to manage those funds pursuant to the trust terms you select for the benefit of your surviving spouse or children.
4. Execute a durable power of attorney.
A durable power of attorney allows you to name an agent to act on your behalf, provides specific powers to that individual, and is effective upon your incapacity or immediately. This document is used primarily to allow your agent to handle your financial matters if you are unable to do so and will avoid the necessity of having to petition the court to appoint a conservator.
5. Execute a health care power of attorney.
A health care power of attorney is a document by which you designate a patient advocate to make medical decisions for you in the event that you are unable to do so. This document also contains your medical directives, upon which your patient advocate can rely.
6. Review your beneficiary designations.
You should work with an estate planning attorney to ensure that the beneficiary designations on each of your assets is tailored to your family’s estate plan. Often for a young family, you would name your spouse as the primary beneficiary to ensure sufficient liquidity for short-term monetary needs.
The estate planning process is easy to complete with the help of a knowledgeable estate planning attorney and should not take much of your time. The resulting plan is flexible, and can be amended as your family matures. Once complete, it will provide you with a sense of comfort knowing that you have a plan in place.
This article is for informational purposes only and is not legal advice.