Thursday, January 27, 2011

Why Young Families Need to Create an Estate Plan

As the father of two young children, I am acutely aware of how vulnerable my children would be if something happen to me and/or my spouse.  My children are completely dependent on us for the next 20 or so years.Creating an estate plan is not just for the elderly or the wealthy, anyone with children needs to create an estate plan.   Not only do I need to decide who would take care of my children but also how they will be financially supported.  Here's how a good estate plan will protect your family and your assets.

• Guardianship: First and foremost your plan will nominate a back up guardian in your will for your children if something should happen to the parents.  If you don't have a will, a judge will make the decision for your kids and you will not have any input.
• Asset Preservation:  By having a properly prepared and funded estate plan, you can ensure that as much of your assets that you currently have will be available to support your children.  By creating and funding a Living Trust, you can minimize the impact of legal fees and expenses on your assets.
• Income Replacement:  One of the primary issues if something should happen to the wage earners of the family is that their income will be lost forever.  The money earned to pay for food, clothing, shelter and education will need to be replaced.  Evaluating how much life insurance your family needs if something should happen to you is a critical to the financial protection of your family. 
• Inheritance Planning:  Without an estate plan, your children could inherit all your assets when they turn 18.  For most people, 18 is too young to handle that kind of responsibility.  If you want to ensure that the assets you have worked so hard to earn are not wasted, you need to have an estate plan to regulates when and how your children will receive your assets.

It is never too soon to contact your local estate planning attorney to make sure your family and assets are protected.