-Estate Planning is often associated with something to be done later in life, once the kids have gone off to college or when parents start preparing for retirement. However, a well-constructed estate plan is important regardless of age and the estate planning attorneys from San Luis Obispo’s Toews Law Group, Inc. have some estate planning strategies specifically designed for new parents.
An estate plan for new parents centers around answering two important questions: :Who is going to care for our minor children if we pass away?”; and “How are will our assets be used to support our child(ren)?” If both parents die unexpectedly, the court will appoint a guardian to raise the child(ren). In the absence of written instruction from the parents, the court will decide who it deems to be the best guardian, even though it may be someone you would not have approved. But, if the parents nominated a guardian in their will, the court will give significant weight to the parents’ nominated guardian when determining who will take custody of the children.
At a minimum an estate plan for new parents should include Advanced Health Care Directives (AHCD), General Power of Attorneys, and Wills, containing considerations for who will serve as guardians of the children. If the parents own real property or assets worth more than $166,250, then the estate plan should also include a Revocable Living Trust. A consultation with the San Luis Obispo estate planning attorneys can identify what is necessary to protect you and your children from the unexpected.
A brief overview of each document comprising the estate plan is set forth below.
Advanced Health Care Directives answer questions such as:
- Who will make medical decisions for you, including whether to continue life support, if you cannot communicate your desires?
- To what extent do you want your life prolonged by artificial means?
- Do you want to be an organ donor or have specific wishes regarding the disposition of your remains? Burial? Cremation? Ashes scattered at sea?
The General Power of Attorney specifies who acts on your behalf in matters such as handling bank accounts, signing checks, selling real property or other assets, filing taxes, and other matters as allowed by the state.
Depending on the assets that are owned, either a will or a trust will serve as the foundation of an estate plan. If both parents die while owning real property, or assets worth more than $166,250, then their estates will be subject to probate unless those assets are held in a trust (or transferred by operation of law). In probate, a judge will appoint a personal representative who will marshal the assets, and – after lengthy court proceedings, distribute the assets of the estate pursuant to the California Probate Code.
By creating and funding a revocable living trust, you can avoid the costly probate process and provide specific guidance regarding how you want your assets to be used to care for your minor children.
Under most circumstances a will provides the following:
- Identifies a guardian for your minor children. The guardian is the person or persons who you want to raise your children should you die or become incapacitated.
- Designates a person as the personal representative of your estate. The executor makes sure debts are settled, taxes are filed and the assets are distributed according to the specifications in the will. When formed in conjunction with a trust, the personal representative and trustee are typically the same person
- Specifies how your assets are to be distributed. When used in conjunction with a trust, a will directs that all assets titled in your name “pour-over” into the trust. This allows the trust – a more detailed and private document – to guide the manner in which assets are used for your children’s care.
A basic estate plan helps make sure that your desires for your children are followed if you’re unable to do so. An estate plan should be structured in a flexible manner to reflect the types of growth and changes young families readily face.
A well drafted estate plan should give parents peace of mind in knowing that their children are protected in the event of an unexpected death or incapacitation. The San Luis Obispo estate planning experts from Toews Law Group, Inc., can design an estate plan that makes sure those you trust the most are named to care for your children, handle your health and finances, make sure assets are transferred according to your wishes, and avoid a prolonged and unnecessary probate court action.