Estate Planning for Young Parents

February 11, 2018  |  

Estate Planning for Young Parents

Key Takeaways

  • Don’t have enough assets for an estate plan? Actually, you do–your children.
  • Don’t overlook the importance of life and disability insurance for replacing a parent’s lost income during prime working years. It’s fairly simple at your stage of life.
  • Living wills and powers of attorney (healthcare and financial) will ensure your wishes are honored if you can’t make decisions on your own.

Anyone who’s been a new parent knows, life seems like a whirlwind of diapers, Elmo, tantrums and sleep deprivation. The last thing on your mind is estate planning.

Besides, when you’re young, healthy and always pressed for time, it’s tempting to think: “Why worry about this now?”

Further, many young parents don’t think they own enough assets to justify an estate plan. Actually, you now have some VERY important “assets” to protect–your children. Should something terrible happen to you and your spouse while your kids are minors, your estate documents will specify who you wish to be the guardians for your children.

Estate documents also specify the person(s) you wish to oversee the administration of any inheritance your children will receive while they are minors. Wouldn’t you rather be the one making these important life decisions instead of the courts?

Speaking of making choices for yourself, you’ll also want to name a financial power of attorney (POA) and a healthcare POA who can make financial and/or healthcare decisions on your behalf if you become incapacitated. When it comes to your healthcare wishes, have your attorney draft a living will.

This document allows you to make your specific healthcare wishes known to all those who are close to you.  A living will documents the specific types of healthcare measures you would want to be taken and whether or not you wish to donate your organs.  These are just a few examples.

The key: A living will ensures that your wishes are carried out when you can no longer make decisions on your own behalf.

Don’t Forget Life and Disability Insurance

Once you become a parent, you’ll also want to review your life insurance needs. Below are some of the most important considerations:

  • Outstanding debts: Mortgages, student loans, etc.
  • Current expenses.
  • Replacement of income for a spouse who passes away prematurely.
  • Replacement of income for the remaining spouse – often the spouse needs to take time off work in order to deal with the unexpected situation they find themselves
  • Savings goals: Do you want to fund college for your children? Will the surviving spouse be able to meet those savings needs on their own?

Reviewing these items will help you determine the amount of insurance you’ll need and the type of insurance (and term) that best fits your situation.

Lastly, an often-overlooked part of estate planning is disability insurance. That’s surprising when you consider that one in seven adults aged 35 to 65 will be disabled for a period of five years or longer, due to injury, illness or other unexpected mishaps. 

Disability insurance can be enormously helpful when it comes to replacing lost income when a working age parent suffers a serious accident or illness.

Conclusion

No young person wants to talk about their demise. We know estate planning can seem overwhelming, even in the simplest of circumstances.

But, it’s especially important to get the ball rolling when you have young children, even when you barely have time to shower and brush your teeth. Fortunately, the process doesn’t have to be complex and you don’t have to go it alone. When you’re young, estate planning is usually relatively straightforward and can be done with simple documents.

If you or someone close to you is concerned about their insurance or estate plans, feel free to reach out to us and let us help you get started. If you do have an estate plan, congrats! Just make sure you update it frequently since life circumstances change often, no matter what your age.

 

 

Advisor is not a licensed insurance broker or agency and does not sell or solicit the sale of any insurance products.  Licensed individuals should be contacted for insurance product suitability and policy acquisition needs.  Adviser is not licensed to provide and does not provide legal or accounting advice to clients.  Advice of qualified counsel or accountant should be sought to address any specific situation requiring assistance from such licensed individuals.

 

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About Leslie Young, ChFC

Leslie manages client relationships and works closely with the investment management team to provide the optimal client experience. She is also involved in preparing and analyzing client wealth plans as part of our financial planning process.

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