Estate Planning Hot Topics

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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. While none of us expects to die while our family is young, planning for the possibility is prudent and responsible. 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 or become more complex. A good estate plan for a young family will include the following:

Naming a Personal Representative
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.
maryland estate planning for young families
Naming a Guardian for Minor Children
Deciding who will raise the children if something happens to both parents is often a difficult decision. Obviously, it is very important, however, because if the parents do not name a guardian, the court will have to appoint someone without knowing the parents’ 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 first. If both parents die and the children are young, the parents typically want their assets to be used to care for their children over time. Some assets will transfer automatically to the surviving spouse by beneficiary designations and how title is held. Nevertheless, an estate plan is still needed in the event that the surviving 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 the parents name a “Guardian of the Property” of their minor children, the court will appoint someone to oversee the childrens’ inheritance. The court-appointed Guardian of the Property likely will be 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 receive the bulk of theiir inheritances when they are older than 18; and prefer 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 upon the death of the parents, and someone may need to be hired to take over the responsibilities of a stay-at-home parent. Additional insurance coverage may be needed to provide for the children until they are grown; even more if the parents want to cover college costs.

Planning for Disability
Increasing, as our population lives longer, one or both parents become disabled due to injury or illness. 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. People often names their spouses for this role, but it is prudent to name one or two additional, alternate agents should the spouse be unable to act. HIPPA authorizations will give doctors permission to discuss your medical situation with others who you name, such as parents, siblings, adult children and close friends. Disability income insurance should also be considered, because life insurance does not pay upon disability.

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