Whether you’re a new mom who’s cooing over your infant (when you’re not falling asleep from the exhaustion of being woken up four times a night); or you’re the mom of older kids or even teens, you recognize your profound responsibility. Your children need you. You’ve invested energy teaching your kids to look both ways before crossing the street, to make their beds and to eat their veggies. But your work is not yet done! You also need to plan ahead and think about how to take care of them if or when you no longer can.
Consider the following when you establish your estate plans:
- Designate a guardian to take care of your children, in case you and your partner die or become incapacitated. This person should understand and live your values; be fair and trustworthy; be financially literate; and have both the capacity and the desire to raise your children to adulthood. Bear in mind that different people can fulfill different guardianship functions. For instance, perhaps your younger brother has tons of energy and a small child of his own. He and his wife could welcome your children and raise them. But he’s not great with money. Your cousin, however, is a financial analyst, who’s also very trustworthy. Your brother could be named the guardian for your child, while your cousin could be named the guardian of the estate.
- Establish durable and healthcare Power of Attorney (POA). Durable POA empowers someone you trust to act on your behalf if you become incapacitated (after a car accident, for instance). He or she can make key decisions about your finances, real estate holdings and assets—decisions that can positively affect your children. Healthcare POA allows someone you trust (could be another person) to guide the care you receive, so it’s in line with your wishes and values.
- Create a will and/or a trust. These documents specify how to pass assets to your beneficiaries. Ideally, the structure minimizes your tax burden, allows your estate to bypass the often-burdensome probate process, prevents infighting among relatives, and in general gives you control over when, how and under what circumstances your beneficiaries receive assets. In general, using a trust is an excellent strategy. Your trustee (possibly the same person as the guardian) could oversee the funds and distribute them over time according to your wishes.
- Depending on your situation, other solutions may be appropriate. For instance you could establish annuities to be paid out to your children every year to handle expenses and/or transfer Individual Retirement Accounts (IRAs) to them. IRAs can be attractive, because they have potential to grow in size over time. Alternatively, if your child has a disability, you could establish a Special Needs Trust (SNT) to support her.
Insight to Get the Peace of Mind You Need
Being a mother is (almost) never simple. But you don’t have to work through the challenges of planning for your children in a vacuum. Our experienced attorneys are here to help. Please contact us now to set up a private consultation about your next steps.