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As parents, we would literally do anything for our kids. From making sure they have swim lessons to starting a fund for their college education, and most of all, we love them unconditionally.
I have a little girl on the way, but I see it in my friends and family members who are already parents. They are particular about the way they do things – carefully watching their kids’ diets, making sure they eat their veggies, scolding the grandparents for giving them fast food. Even now, I have nightmares thinking about if something happened to my daughter, how I don’t think that I could survive. Already, I would go to the end of the earth to protect her.
But there is one question that as parents we tend to forget to ask ourselves: What would our kids do if something happened to us?
We shrug off the thought. Young, full of life, just starting a family, the idea of even the possibility of not being around to see our kids grow up keeps us from taking the measures needed to protect our kids from the unexpected.
The reality is that anything can happen. Yes, it’s painful to think about a scenario where your children lose their parents, but there are measures you can take to guarantee they will be protected financially and live in the care of someone you trust.
It starts with asking yourselves three main questions.
Through estate planning, you can designate guardianship of your minor children. Rather than letting the state or courts decided, you and your partner can leave your children in the care of someone you trust. Think about who will cut the crust off of their PB&Js, and instill similar values that you would prioritize for your children. Then, have a conversation with that individual or those individuals to ensure that everyone is on the same page. Once the decision has been made, it’s very simple to formalize through legal documentation—and unfortunately nothing but an official will can satisfy the courts. In the event that something should happen to you or your spouse before a will is in place, the courts will potentially designate a next of kin to care for your kids. Controlling the process in advance, even if it’s just a precautionary measure, will give you the peace of mind every parent deserves.
This is the question we all are struggling with as parents. But this is one outcome of tragedy that is the most straightforward, and it’s as easy as securing a life insurance policy. By setting up life insurance now, and setting up a trust, you are able to provide for your children monetarily even on a posthumous basis. Not only does this provide you with more options for guardianship– because it removes finances as a consideration–it can help give your children the life you had imagined. While this is obviously not a best-case scenario, it does ensure that some element of security can be maintained for your minor children on your behalf. When you care deeply for someone, life insurance is one way to guarantee that there is no financial gap should you pass away.
A trust is an estate planning vehicle that provides parents with the most control over their assets. Remember that life insurance policy you are now going to set up? A trust will allow you to manage how the money is spent, and when. In fact, trusts are the perfect estate planning vehicle for those with young children who may be incapable of properly managing their money. A trust allows you to determine when and how the assets will be distributed, even down to creating spending allowances for your kids. From designating money for education, living expenses and defining a timeline for when the money is released, trusts are a great way to safeguard finances so that your children have additional security, not just when they are minors, but throughout their lives. Not to mention, that in most cases, trusts can pass through without probate, which means they can avoid a costly court review process.
Estate planning is one of those scary topics that we avoid—a step in adulting that is easy to put off. But when you have a family, or in my case, a baby on the way, it’s important to make sure you take every precaution to make sure your children are cared for, under even the worst and most unexpected circumstances. Instead of putting it off, have those conversations now.
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