If you’re a parent or about to become one it is time to get serious about planning. This is the case whether you’re married, single, or co-habitating, The first step is to sign a Will naming a guardian to raise your child.
Couples should agree on the choice of guardian and each of their Wills appointing the same person. The Wills should agree with each other in case both parents die together, e.g. auto accident. But disagreements often delay planning; most people don’t like to think about these things. Moreover, most people don’t even begin thinking about these questions until their lawyer starts asking them answer.
Unless you or your chosen guardian has plenty of money, you’ll need life insurance to cover your child’s future expense. Be aware, however, that if you buy and own the policy, the proceeds will be part of your estate, even if your child is the beneficiary. This might lead your estate to be subject to federal estate tax (Arkansas does not have an estate tax). You can avoid this by setting up an irrevocable life insurance trust to buy and own the policy.
While you’re at planning you may want to think about trusts. There are two ways to accomplish this: 1) testamentary trusts set up by your Will, or 2) irrevocable trusts set up by your living trust. These trusts hold any other assets you’re leaving minor children. You could name a guardian for the money, but a trust allows you to state specifics about how the money is to be spent and at what age and under what conditions your child can gain control of any remaining trust property. You can also use a trust to build in a little oversight, e.g. naming both your child’s prospective guardian and someone else as co-trustees.
Finally, don’t assume that if you are married with children all your assets will go to your surviving spouse. If you have kids in Arkansas the spouse only receives 50%, the kids get the other 50%. This can be a big problem if you have kids from other partners or spouses. Or, if your kids are over the age of 18, then the spouse can be left without enough to care for herself.
Yes, you could use forms and online resources to do most of this, but hire a lawyer. There’s a lot you could get wrong, and an experienced attorney at wh Law | We Help can offer practical advice on how to protect your heirs from the world and themselves.