You’re a Mom & Dad. What Now?
Congratulations! You have experienced one of life’s true miracles! You have had a baby! It is truly amazing, but with ALL of the little details that are oh, so important in the here and now, thinking of your son or daughter’s future is probably not top of mind.
Even though it is the last thing you want to think about, let alone discuss, we urge you to consider putting estate documents in place as soon as possible to protect your new child and your estate. By the way, when we use the word “Estate,” you may start picturing a huge mansion in front of rolling hills and a fancy car in the circular drive, but “Estate” really just means the net worth of a person at any point in time, alive or dead.
Anyone in Arizona with an estate worth more than $75,000 in personal assets and/or $100,000 or more in real estate will automatically be involved in probate (court proceedings to approve a will). There are ways to avoid it, including having the appropriate estate papers drawn up and putting assets into a trust so they are protected. I can explain how this works in your specific situation during a consultation.
Here is a basic checklist of items to talk with Seiter Law about in order to protect your family in the future:
1) Drawing up a Will that includes a Guardian for your Child(ren). Your Will is a legal document that lays out your final wishes. It describes in detail how you want things to be handled in the event of your death. The will designates a guardian for your child(ren); creates trusts (see #2); distributes your assets; names executors; and plans for the payment of outstanding debts, including taxes.
2) Set up a Trust for your Estate. A trust is simply a relationship in which assets are held by a trustee for specified beneficiaries or heirs. Trusts allow you to put provisions in place regarding how the assets are distributed to the beneficiary. Setting up a trust fund offers you and heirs benefits such as asset protection, tax breaks and the avoidance of probate in court after a grantor’s death.
3) Name an Executor for your Estate. An executor is a person designated by the writer (or writers) of a will to be responsible for making sure that all debts and creditors are paid off and that any remaining money or property is distributed according to the decedent’s wishes. You will want someone who is level headed, trustworthy and responsible to take on this role. Sometimes it is even best to hire an outside firm to do so.
4) Designate Beneficiaries for Assets such as 401(k)s, IRAs and Life Insurance Policies. Keep in mind that all of these accounts will ask you to designate beneficiaries. Make sure that your designations (however old they are – maybe they were made before a marriage?) match those in your will. The designations on the forms will outweigh those in a will or trust. See our post “Beneficiary Forms Override Estate Planning Docs” for more details.
5) Set Up Power of Attorney. There are many kinds, but the basic gist is that this document gives one person the authority to act for another person in specified or all legal, medical or financial matters. Having this document in place before it is actually needed makes what are tough times, just a bit easier in many cases.
These issues are not things we as parents even like to consider, especially when babies are the beginning of a new life. But, sadly when things go wrong they are often when least expected, so having a plan in place is generally an extremely wise investment of time and energy. I work with clients in ways that make this process go smoothly and quickly. Please contact Seiter Law for more information.