08 Jun If You Have Children, You Need a Will
You’re a young, married couple and just starting out in the world. You probably have small children and a large mortgage. Or, perhaps, you’re a single parent, trying to make a life for yourself and your kids. Words like “assets,” “estate planning” and “net worth” simply don’t apply to you — at least not yet. You don’t have vast amounts of money in investments; you don’t own lots of valuable property. If you died, there wouldn’t be much to sort out financially, so, you certainly don’t need a will. Or do you? The answer to that question is, yes, you do. A will, or even a living trust, encompasses many more factors than simply who inherits your money. There are several valid reasons why everyone, especially parents of young children, should have a legal will.
Creating a Guardianship: Someone who will care for your children
From an emotional standpoint, this is perhaps the single most important reason to have a will. If both you and your spouse should die, your children will need a guardian. If you do not leave instructions behind in the form of a will, the court system will make this decision for you. Such an important and personal choice should not be left in the hands of a judge. As hard as it is to think about dying and leaving your children alone, it can be reassuring to know that in the case of this unlikely eventuality, they will be properly cared for. A will naming a legal guardian can give you this peace of mind.
Here are some questions to consider when choosing a possible guardian for your children.
- How old is the guardian and how old are your children?
- While your parents may have offered to raise your children if need be, take into consideration the fact that they are older now and may not have the energy to keep up with small children.
- You might want to choose someone closer to your own age.
- If your children are older, however, their hands-on needs will be less and an older guardian might be perfectly appropriate.
- How important is your religious background? Some people feel it is essential that their children be raised in their own religious tradition. Others feel more flexible about it.
Only you can decide how important this factor is when choosing a guardian. Who would your children feel comfortable with? While this is not a decision children can make for themselves, their comfort level is important. If you have the choice between two equally qualified guardians and your children know and love one of them, then that person is the better choice. Is the person you’ve chosen capable of being a guardian? Some well-intended friends and relatives may offer to care for your children, but you need to look realistically at their circumstances. Be sure that the person you choose has the time and resources to be a good parent.
Control of family assets
Many people assume that if their spouses die, all of the family assets will go directly to them. Assets can include savings accounts, motor vehicles, homes, life insurance proceeds and even retirement funds. As hard as it is to contemplate going on without your spouse, knowing that all the family resources will be at your disposal can be reassuring. The problem is, if a person dies intestate — that is, without a legal will — this may not be the case. When a person dies without a will, the court system steps in and decides who should inherit the estate.
While laws vary from state to state, half of the family assets probably already belong to you outright. Your spouse’s half of the family assets will likely be divided between you and your children. This can mean that a certain percentage of your home, cars and savings will now legally belong to your children. From then on, the court must step in and see that the children’s interests are protected. You may be required to get permission from the court any time you want to use the children’s assets, even if it will directly benefit them. If you choose to sell your house, for instance, you may have to get permission to do so. This nightmare scenario can be avoided by having a will. Your will can simply state that all family assets are to go to the surviving spouse. The children will only inherit should both parents die. This will allow you to remain in charge of your resources and direct your energies toward building a new life with your children, rather than spending time petitioning the courts for permission to spend your own money.
Planning for the future
Even if your estate is very small, there are other, more personal, reasons to have a will. You may want to be sure that certain keepsakes go to each of your children. You may also have money in savings for them – for their educations, perhaps, or for braces or dance lessons. A will can give you the chance to outline just what the money you have in savings was supposed to be used for. It can be your last chance to reach out to your children and let them know how important they were to you.
Creating a Living Trust to guide and control an inheritance
Sometimes it’s not simply a matter of ensuring that your children inherit your estate after you are gone; sometimes you may want to guide and control that inheritance – especially if your children are still young. That’s where a living trust comes in. A trust is a legal agreement which appoints one person or entity to oversee the assets of another. A living trust is one formed while the original owner of the assets is still alive. In the case of families with young children, a living trust can be formed to manage any assets the children receive if their parents die. Even people who do not have large estates often have life insurance. If you have life insurance, the living trust would ensure that the proceeds from your policy were held and managed for your children until they were old enough to manage it themselves. You would have the peace of mind of knowing the money would be safe and waiting for your children when they needed it.
If you’re worried about your children getting a large sum of money when they are too young to handle it responsibly — as might happen with a will — you can even stipulate an age at which they will gain control of the funds. Rather than getting the whole amount at 18, for example, they would gain control of it when they were older — 30, say — and better prepared to make sensible use of it. It may be reassuring to remember that most parents of young children live long enough to see their kids safely to adulthood. But sometimes the unexpected happens. Having a will or living trust in place now can give you peace of mind about your children’s future.