Working with an attorney to determine what estate planning documents best fit your and your family’s needs is a critical exercise for young families.
Wills can be an important estate planning tool as they typically outline how surviving family members, such as a surviving spouse and children, will be supported monetarily from the estate. Many wills establish trusts for asset protection purposes and to ensure surviving family members have continued financial support during their lifetimes. A will can also delineate who will take guardianship of minor children should both parents pass away.
Other important documents to consider when drafting a will include a power of attorney(s) and a living will. A healthcare or financial power of attorney can give a pre-selected individual(s) the authority to make healthcare and financial decisions upon incapacitation, while a living will informs end of life desires, care, and decisions. For younger adults, end of life planning can be difficult to fathom, but it can be helpful to take a proactive approach. Not having a plan in place in the event of your incapacity or death can be very difficult on grieving family members.
Life insurance is another estate planning mechanism that can represent the highest valued asset for young families. Life insurance proceeds provide financial resources and can help families maintain an accustomed standard of living despite a loss of income. Life insurance proceeds can also fund a trust or an account for your child(ren)’s care and education.
Review named beneficiaries annually for brokerage accounts, bank accounts, 401(k)s, ROTHs, or any other types of retirement accounts. Accurate beneficiary designations will ensure assets pass directly to the person(s) you choose. This will also simplify the transfer process since these asset types can be designated to pass separately from the instructions in a will.
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