If you already have an estate plan in place you are better off than over half of all Americans. Despite acknowledging the need for an estate plan, experts tell us that the majority of Americans don’t have a plan in place. Although you already have a basic plan in place, do not make the common mistake of assuming you are done with estate planning. As your assets grow, and you go through important changes in your life, you may need to make corresponding changes to your estate plan. For example, the Creve Couer estate planning attorneys at Amen, Gantner & Capriano, Your Estate Matters, LLC discuss how becoming a parent changes your estate plan.
Estate Planning Basics
Although every estate plan is certainly unique, there are some common themes and components of a basic plan. For most people, a basic estate plan ensures that they do not leave behind an intestate estate in the event of their death. The simplest way to accomplish this most basic estate planning goal is to execute a Last Will and Testament. As such, a beginning estate plan often consists of nothing more than a Will.
The Need to Review and Revise Your Basic Estate Plan
A simple Will does ensure that you won’t leave behind an intestate estate and provides a roadmap for the distribution of your estate assets after you are gone. It also requires you to appoint an Executor to oversee the probate of your estate and provides you with the opportunity to nominate a Guardian for any minor children you have, or will have in the future. When your estate assets are simple and not particularly valuable, and when you have yet to/ marry and/or become a parent, a Will alone is often sufficient to meet your estate planning needs. That basic estate plan, however, should be reviewed on a routine basis and revised if warranted. In addition, certain life events may prompt an immediate revision of your estate plan. Becoming a parent, for most people, is one of those life events that should prompt revisions to your estate plan.
Becoming a Parent
Becoming a parent for the first time is a life-changing event for most people. You now have someone else for whom you not only feel obligated to protect an provide for, but that you fiercely want to protect and provide for as well. With that in mind, you will undoubtedly want to make changes to your estate plan that ensure these goals are met. Some common changes first time parents make include:
- Creating a trust – your minor child cannot inherit directly from your estate. A trust can resolve this dilemma by allowing you to transfer your child’s inheritance into the trust and using the trust terms to distribute that inheritance down the road. A trust can provide numerous additional benefits as well, including incapacity planning benefits. For the moment, however, another important benefit gained by using a trust to distribute your child’s inheritance is the ability to stagger the distribution instead of handing a relatively young adult a lump sum of money one day.
- Purchasing or increasing life insurance – particularly for young parents who have yet to build up significant assets, life insurance provides a safety net that allows you to leave behind enough funds to provide for your child after you are gone.
- Creating an incapacity plan – while the possibility of your death is the motivation for a basic estate plan, a comprehensive plan should also contemplate the possibility of your incapacity. If you are incapacitated, who will take over the care of your children? Who will make decisions for you? Who will control your assets?
- Executing a power of attorney – if you ever leave your child with a caretaker, you should execute a limited power of attorney to ensure that the caretaker has the legal authority to seek medical treatment in your absence if it is needed.
Contact Creve Couer Estate Planning Attorneys
If you have additional questions or concerns about how becoming a parent changes your estate plan, contact the experienced Creve Couer estate planning attorneys at Amen, Gantner & Capriano, Your Estate Matters, LLC by calling (314) 966-8077 to schedule an appointment.