Why you need an estate plan if you're a parent.
As a parent, you take care of everything for your family: groceries, rides to practice, daycare payments and more. But there’s one thing no parent likes to plan for: an unexpected event that could prevent you from providing for your family. We get it, it’s not fun to think about.
From naming a guardian for your children, to establishing your wishes for end-of-life care, an estate plan gives you a measure of control in the case of an illness, accident or, in the worst case scenario, if you pass away. Without an estate plan, important decisions could be left up to a court, and your assets would be tied up in legal proceedings. To help ensure that doesn’t happen, get started on your estate plan with this guide to what it entails and the steps to take.
- Take stock of your financial situation and preferences. If you choose to meet with an attorney, this will pave the way for productive planning.
- Take inventory of your assets and liabilities, such as property, vehicles and student loans
- Gather statements for any bank, retirement and investment accounts as well as any existing life or disability insurance policies
- With your spouse, discuss potential guardians for your children
- Consider your preferences for end-of-life care
Create the following five documents.There are many different ways to approach estate planning, but there are five key documents that should form the basis of yours. Your financial advisor and an attorney can help ensure your plan is documented correctly and according to your state’s laws.
Estate planning services can cost anywhere from a few hundred dollars to $2,000, depending on your circumstances and needs. See if you can access discounted legal services through your employer.
- A will.
A will isn’t just about money. In addition to designating who will receive your assets after you pass away, it also allows you to designate a guardian for your children. Without a will, the state may ultimately get to decide who will receive your assets and become guardian to your children.
- A living trust.
A trust is a legal structure that can complement a will. It lets you place conditions on how and when your assets should be distributed in the event of your death. For example, a trust can help manage an inheritance for children who are still minors.
- A healthcare power of attorney.
This enables you to appoint someone to make health care decisions on your behalf.
- A living will.
Should you become incapacitated, this document outlines your wishes for end-of-life care.
A durable power of attorney.
This grants another person the legal authority to manage your financial and business affairs in a general or limited capacity should you be unable to do so yourself. Their authority does not continue if you pass away.
Get life insurance if you haven’t already.A life insurance policy helps protect and secure the financial future of your loved ones by providing funds to your designated beneficiaries. When choosing life insurance plans and coverage amounts, consider the total income earned by one or both parents that would need to be replaced if either or both of you passed away.
In addition, keep in mind the work a stay-at-home parent provides, such as childcare and housework. Those responsibilities would need to be covered if the stay-at-home parent passed away, or if they had to earn an income outside the home. You may also want to include enough to help cover major bills, like a mortgage, and expenses for children until they’re grown.
You can use an online calculator to determine your insurance needs.
Name your beneficiaries.Be sure to add beneficiaries and contingent beneficiaries to your insurance policies, banking and retirement accounts. Review your plans periodically to make sure the beneficiary information is up-to-date on all of your financial accounts.
Review your estate plan annually.Once you’ve created the necessary documents and put your plan into place, it’s a good idea to revisit it each year to ensure it’s still accurate. Be sure to review and update your plan as needed whenever you experience important changes, such as welcoming home new children, or new life stages, like college, empty nest and retirement. By setting aside time now for family estate planning, you can enjoy peace of mind knowing that you’ve helped provide security for your loved ones and ensured that your future wishes will be carried out. Learn more about the ways a Commerce Brokerage Services, Inc.* financial advisor can work with you to develop an estate plan.
*Commerce Brokerage Services, Inc., Member FINRA/SIPC, is a wholly owned subsidiary of Commerce Bank. Brokerage and insurance products are not FDIC Insured, contain no bank guarantee, are not insured by federal government agency and may go down in value.
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