How can a little planning protect your assets and your family?
We make five-year life plans, savings plans, and even dinner plans, but what about the plan for when the unthinkable happens and we are no longer here to care for our families? Nationally, only 42 percent of adults in this country have estate planning documents such as a will or living trust, according to a Caring.com survey. The numbers in Ohio are slightly more encouraging; with 57 percent saying they have a will in place stipulating who will care for their children in the event of the parents’ death, according to results from the Ohio Credit Union League’s 2017 Consumer Survey.
Two things people don’t like to talk about are money and death. However, taking care of these uncomfortable subjects with a will can formally address the distribution of assets, and for parents, outline directives for the care and custody of their children. These formal papers communicate your wishes to the people who you want to care for your children and communicate your intentions to the state via legally recorded documents.
What many people don’t realize is that verbally stating your wishes to family members and friends is not enough to ensure those wishes are followed. Without a will, the state takes the responsibility of dictating the disposition of any property and the care of any children. People also sometimes think they don’t have enough assets to warrant the trouble and cost of a will. Regardless of how much or how little one has accumulated, most people would still rather decide what happens to their assets than have the government make that determination.
Most parents don’t want to think about dying or becoming incapacitated, but it’s a possibility that shouldn’t be ignored. It’s important to make sure children are provided for, and it’s imperative to clarify parents’ wishes for the children’s care and upbringing should they be unable to raise them. Even people without a lot of assets or a complicated financial picture should follow these basic guidelines to protect their children’s interests.
• Designate first responders: These people will go to your children in a time of crisis. Ensure these trusted friends or families have the appropriate documentation to establish their clear legal authority to care for your kids. This will guarantee your children go directly into the care of an adult of your choosing rather than into the foster care system until the courts determine who should have guardianship.
• Define guardians for long-term care: Parents can agree upon guardians for their children, and even verbally communicate their wishes to their families. But if those intentions are not communicated in a legally-binding, written document, every family member would have equal priority of guardianship, and again, the courts will be the final say in who raises the children. This legal documentation is especially important if you choose a friend, rather than a family member, as a guardian.
• Make sure the designated guardians know how you want your children raised: What educational, spiritual, and cultural path do you want them to take? The only way to ensure your children are raised with the values you would have instilled in them yourself is to make those values clear to the guardians you’ve chosen.
• Document your plan, regardless of your assets: If you have any assets at all, you should have a will. You’ll want to make sure the right thing happens to your assets, and to your children, in the event of your death. Simple estate planning can be done with online legal document services, but it’s still wise to speak to an attorney about drawing up your will.
• Plan to provide sufficient financial support: When you have children, you are responsible for supporting them until adulthood. With sufficient life insurance, even if you pass away, you can still fulfill that responsibility and financially provide for your family. It’s not just the main breadwinner who needs life insurance. Even stay-at-home parents who don’t earn an income should be insured. If they pass away, everything they do without getting paid needs to be done by someone like child-care providers, which require weekly fees.