Silicon Valley Estate Planning Journal

News and Articles from the Law Offices of John C. Martin

Estate Planning for Young Families

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Many young families put off estate planning because they are
young and healthy, or because they don’t think they can afford it. But even a
healthy, young adult can be taken suddenly by an accident or illness. And while
none of us expects to die while our family is young, planning for the possibility is prudent and responsible.
Also, estate planning does not have to be expensive; a young family can start
with the essential legal documents and term life insurance, then update and
upgrade as their financial situation improves. A good estate plan for a young
family will include the following:

 

Naming an
Administrator

This person will be responsible for handling final financial
affairs—locating and valuing assets, locating and paying bills, distributing
assets, and hiring an attorney and other advisors. It should be someone who is
trustworthy, willing and able to take on the responsibility.

 

Naming a Guardian for
Minor Children

Deciding who will raise the children if something happens to
both parents is often a difficult decision. But it is very important, because
if the parents do not name a guardian, the court will have to appoint someone
without knowing their wishes, the children or other family members.

 

Providing Instructions
for Distribution of Assets

Most married couples want their assets to go to the
surviving spouse if one of them dies. If both parents die and the children are
young, they want their assets to be used to care for their children. Some
assets will transfer automatically to the surviving spouse by beneficiary
designations and how title is held. However, an estate plan is still needed in
the event this spouse becomes disabled or dies, so that the assets can be used
to provide for the children.

 

Naming Someone to
Manage the Children’s Inheritance

Unless this in included in the estate plan, the court will
appoint someone to oversee the children’s inheritance. This will likely be a
friend of the judge and a stranger to the family. It will cost money (paid from
the inheritance) and the children will receive their inheritances in equal
shares when they reach legal age, usually age 18. Most parents prefer that
their children inherit when they are older, and to keep the money in one “pot”
so it can be used to provide for the children’s different needs. Establishing a
trust for the children’s inheritance lets the parents accomplish these goals and select someone they know and trust
to manage it.

 

Reviewing Insurance
Needs

Income earned by one or both
parents would need to be replaced, and someone may need to be hired to take
over the responsibilities of a stay-at-home parent. Additional coverage may be
needed to provide for the children until they are grown; even more if the
parents want to pay for college.

 

Planning for Disability

There is the possibility that one or both parents could
become disabled due to injury, illness or even a random act of violence. Both
parents need medical powers of attorney that give someone legal authority to
make health care decisions if they are unable to do so for themselves. (You
would probably name your spouse to do this, but one or two others should be
named in case your spouse is also unable to act.) HIPPA authorizations will
give doctors permission to discuss your medical situation with others (parents,
siblings and close friends). Disability income insurance should also be
considered, because life insurance does not pay at disability.

If you have additional questions, contact a Palo Alto Estate Planning Attorney

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