Very few events make you feel more grown up than leaving the hospital with a baby. Part of growing up is recognizing your responsibilities and fulfilling them. Planning for your family is at the very top of the list of responsibilities. Avoid more unwanted sleepless nights and use this advice to ensure your planning is done right.
The fundamental goal of estate planning is to make things easy on your family when there’s a death. In most states, that means staying as far away from the court system as possible (which is the biggest selling point for revocable trusts). But every state is different, and you should do a little research to understand your own situation. In California, for example, it can easily take more than a year for things to make their way through a court, but in Florida, it’s only a matter of weeks. Explore the website of your state’s bar association because many of them publish useful educational material.
Your spouse should be the focus of your estate plan. If you die, your spouse is going to have one heck of a job – dealing with your affairs, juggling schedules and worrying about finances. The last thing your estate plan should do is make life harder for your spouse. So no matter how much you hear about spouses who remarry and fritter away all their money, resist the urge to lump your own spouse in with those jokers unless you’ve got specific reasons to worry. Instead, give your spouse as much flexibility and control as possible.
If your kids are under 18, your plan will identify the person who should take care of them. People often say something like, “I want my brother and his wife to get my kids.” Don’t do that. It may feel better to mention them both but chances are you’d prefer the job to go to your brother. What if they get divorced after they have your kids? If you named them both, then your kids will end up in a custody dispute.
A letter from you explaining your desires for your kids is absolutely priceless. Explain why you think your daughter should study accounting but your son should focus on poetry. Encourage them to travel every chance they get. Detail the traditions that are most important to you – from religion to silly family rituals. If the worst happens, this letter will be the single most important document you can prepare because it helps your kids know you. And since this is something that comes from your heart, you don’t need to pay a lawyer for this. That means you can change it every year.
Slow and steady wins the race, right? That only works if you can take your time. If you start saving for college when your kids are toddlers, you’ll probably find that a few hundred dollars a month does the trick. But if you wait until they’re in middle school, the task may be nearly impossible. Get advice from a fee-only financial planner, who won’t be torn between giving you solid advice and earning big commissions for selling a product.
Estate plans have lives of their own. Simple plans work when your kids are young. More complicated plans make sense while they’re just getting the feel of the world, and simple plans often make sense again when they’re firmly established on their own. Studies show that most people change their estate plan about every five years. So don’t make the mistake of putting this off because you’re not sure how they’re going to turn out. Make a plan and remember that you can – and should – change it several times over the years.
Estate planners like to focus on the “what ifs?” “What if your son has a gambling problem?” “What if your daughter marries a rock star?” “What if your grandchildren refuse to go on family trips with you?” Rest assured that you will never predict all the alternatives; you can never plan for them all. So focus on the most likely outcome based on what you know right now.
The need for estate planning becomes pretty apparent when you have kids, but don’t forget that your plan also addresses your own needs. It’s hard to think about this when you’re holding a powered baby, but there may come a day when you cannot manage your own affairs. The documents in an estate plan are meant to cover this possibility. When you’re asked, “Who would you trust to pay your bills if you can’t do it yourself?” take the time to think that through even though you’re more worried about who will raise your kids if the worst happens.
Remember that you’re not paying the estate planning lawyer for documents. Nearly every clause you’ll put in your documents is already on his computer. You’re paying the lawyer to help you understand the issues so you can make decisions about what is best for your family. You are the only person who can make those decisions, so make sure to participate in the decision making. Don’t let the lawyer make decisions for you.
Remember: nothing gets done without a plan, but you should never count on things going according to plan. You’re having a baby. Welcome to the madness. It’s important to get your estate plan done, but life is found when you sink into the moment. Put your plan into place, know that you’ll probably change it several times and then let yourself breathe. Look for the good part of every experience, no matter how maddening it may be. Because eventually you’ll take these experiences and work them into the next version of your plan.
Don’t feel that setting up an estate plan when preparing for a baby is one more burdensome item on your list. Embrace the moment but think about how you’ll want your spouse and new addition taken care of in the future in case anything happens. Consult with an attorney that you trust and will help guide you toward putting a plan in place (for now).
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