As people become parents, it becomes a higher priority to plan their estate and make sure that their children would be taken care of no matter what happens. Whether if you are a new parent or if you are raising teenagers, you can never start planning your estate too early. However, it can be difficult to know where to start and how to approach your children about your estate plans. Don’t stress, though. This guide details what you need to know when determining your estate plans and how to talk to your children about your wishes.
What You Need To Do To Ensure Your Estate Is In Order
Make sure you have all of your bases covered when planning your estate
As a parent, making sure that your estate is in order is the best thing you can do to ensure the plans and wishes you have for both you and your children can be possible. When you start planning your estate, you will need to come up with a plan for what would happen if you pass away, or if you have a partner, what would happen if both of you were to pass away.
1. Execute Last Will and Testament
When planning your estate, the most important element to set up is your last will and testament.
Without a will in place, the decisions surrounding your property will be left up to the state and its intestacy laws. More often than not, the decisions the state makes about your estate will likely not be aligned with your wishes. So, to make sure things go as smoothly as possible for your loved ones, having a will in place is the best place to start.
A will details your wishes for how you would like your property to be handled, what happens to your assets, and how you would like your dependents to be cared for. You will designate an estate executor, who will be responsible for carrying out the will and communicating your wishes to your beneficiaries. If you have minor children, you should outline who you wish to be their legal guardian—otherwise, that decision will be left up to the courts upon your passing. If you have pets, you can even discuss your wishes for their care as well.
Beyond a last will, you may also want to consider a living will and designating a power of attorney. A living will details your preferences for your care if you were to become incapacitated. More often than not, a living will addresses your wishes for life-sustaining medical treatments, like whether or not you want to be kept alive through breathing or feeding tubes. Granting someone power of attorney will give someone the ability to make those decisions for you in the event you are incapacitated. Getting all of this set up not only makes sure that you will have a clear plan of action for your property and assets upon your passing but also ensures that the people around you understand your wishes in life, too.
2. Consider Life Insurance Policies
Especially for families with young children, you need to consider how your family will be taken care of in the event of your death. If you are a big financial contributor to your family, how will your family be taken care of financially without you alive? How will your family afford to carry through with your wishes for your final arrangements? Do you have large debts that your family will assume? Do you have an inheritance set up for your children to be taken care of down the road? If you don’t have a clear answer to these questions, you may want to consider a life insurance policy.
Life insurance policies are a great way to ensure that your family will be financially secure in the event of your passing. Your life insurance provider will determine how much coverage they will give you, and you will designate beneficiaries who will receive a death benefit after you have passed. Depending on how much coverage you have, your beneficiaries can use this death benefit to pay for your final arrangements or cover any outstanding debts. The death benefit can also act as an inheritance to help your children pay for college or a wedding down the road.
Nowadays, life insurance is as easy to get as ever. What used to be a weeks-long process can now be done online sometimes in a matter of minutes. Especially for busy parents, the opportunity to get a life insurance policy without a medical exam can make it much easier to get the coverage they need without jumping through hoops. One of the most popular avenues to do this is through an accelerated term life insurance policy. Whereas in a traditional policy type, you would be required to go through a medical exam for a policy underwriter to determine how much coverage you can get and how much your premium will be, an accelerated policy rarely requires a medical exam and you can get approved for a policy within minutes. You just have to answer questions about your medical history, detail your financial information, and explain your lifestyle. If you are generally in good health and have a lifestyle that isn’t considered extremely dangerous, you can get approved for a reasonable amount of coverage for a reasonable price. So, if you feel like you may need to get a life insurance policy to support your family upon your passing financially, an accelerated term life insurance policy is a great place to start getting quotes for a policy.
3. Plan Final Arrangements
Your wishes for your final arrangements should be detailed when you are planning your estate. This can include whether or not you want your organs donated, how you would like your funeral planned, and how you would like your funeral to be paid for. If you decide to devote money towards your funeral arrangements in life, you can detail how much of it is paid for and how much will still need to be covered.
4. Gather Important Documents and Information
Upon your passing, your estate executor and your children will need to have access to important documents and information. In terms of physical documents, you will want to gather things like official certificates, like marriage and birth certificates for your children, property deeds, and vehicle titles. You will also want to have information to contact your attorney to get your property settled.
On top of these physical documents, you will also want to gather information for your digital assets as well. This may include login information for online banking, information about how to access your investments, and even login information for your social media accounts. Anything your family may need to know how to access should be gathered and outlined.
When you have all of these documents and information in order, make a copy of everything. Store the originals in a safe place, like a safe deposit box or a fireproof safe in your home. Give a copy to a trusted family member, or tell them about these documents and how they can access them in the event of your passing.
5. Keep Your Estate Up To Date
After you have planned everything you need for your estate and your final wishes, it’s important to keep in mind that from time to time, things will likely change. For example, you may change your mind about who will be responsible for your minor children. On the flip side, as your children age and become adults, some aspects of your estate plans may change. It’s important to revisit your estate plan every 3-5 years to update it as necessary.
How To Talk To Your Kids About Estate Plans
Talking to your kids about death can be difficult, but explaining your estate plans when the time is right can help them understand your wishes
Death is never an easy conversation to have with your kids. And talking about your estate plans can be a hard subject to approach. Of course, what information you choose to share with your children will depend on their age and maturity level. A young child may not need to know where you store all of your important documents, but they may need to know who would take care of them if you and your spouse were to pass away. As your children age, you can gradually share more and more information with them as it becomes important.
Teach Good Habits Early
Especially if your children are young, you may feel it is far too early to have a conversation about your estate plan. With that being said, you can still lay the groundwork for financial planning discussions later down the road.
No matter their age, you should start talking to your children and teaching them about financial literacy. Not only will this teach them good financial habits and responsibilities, but it will also help them feel more comfortable talking about your plans down the road. You might want to talk to them about how to save up money for buying things they want, how to have good spending habits, and how stocks and bonds work. Always remember to meet your children at their age and experience level. Start small and work your way up to bigger conversations surrounding financial responsibility.
Communicate Your Estate Plans When The Time Is Right
When your children are still young, they don’t need to know all the details about your estate plan. As they age, though, more and more information will become essential for them to know and understand. It’s up to you to decide when the time is right and what information is appropriate to give them.
A death in the family may lead to some curiosity in your young children. While these conversations can be difficult to have with young children, helping them understand what would happen in the event of your death and how they will be taken care of in the future can help ease their anxieties and help them become comfortable with these conversations ongoing.
As your children age, you can start having conversations where you tell them more information. For teenage children, you may want to explain your wishes for your health to help them understand why you feel certain ways about how you want your care to be handled.
As your children become adults, then it becomes more important to communicate the specifics of your estate wishes. Especially because your estate plans may change as your children become adults, giving them more responsibility, it’s crucial to explain your living will and your wishes for your power of attorney. Talk to them about your important documents and how they may find them. Explain your wishes outlined in your will and let them know who will be responsible for executing your wishes.
Keep in mind that not all children will be able to emotionally handle these types of conversations, no matter what age they are. Try as best you can to prepare your children for your after-death plans, but always have a backup plan ready if you can’t talk to your kids about your wishes.
Tie Your Conversation Back To Your Family Legacy
It’s not only important to help your kids understand your plan of action, but it’s also important that they understand your family story. While you have these conversations, make sure you tie your wishes back to the bigger picture of how everything you’ve accomplished came together. Tell them how you were able to create this life for yourself by talking about your values surrounding money, the financial mistakes you’ve made, and your spending habits in life.
You might also take the time to explain why you have chosen to handle your estate in any specific way. If you’ve chosen to divide your estate into different distributions, take the opportunity to explain why you made that decision. This way, your children will be able to talk to you and ask you questions to understand your decisions rather than wondering about them after you have passed.
Death can be a difficult topic to think about. However, if you have children, it’s important to approach your plans for death head-on so that everything is situated and they are well taken care of. Talking about your estate plans with your children isn’t easy either, but as they age, you must start having these conversations with them to help them understand your wishes.
