Planning for your demise ranks up there with enjoying a root canal.
Even for financial planners, making decisions surrounding our own passing is challenging. Maybe you’ve experienced a similar situation in your own estate planning conversations.
Our conversations started with the simple goal of establishing a guardian for our children to assure our assets could be used most efficiently. We had a will and jointly owned all things that were not retirement accounts with beneficiaries. We also had an understanding of our desires for how we’d like things to go after the first one of us passed.
But since our first daughter was born, we had not updated our estate documents with who we’d prefer as a guardian.
Emergency decisions had been made and an oral agreement was in place. The kind where just before going on your first plane trip after the baby is born, you call and let the person you’ve picked know that if anything happens, they’re responsible going forward.
Since that rushed call, our estate plan had stayed partially complete, falling behind the rest of life’s to-do list.
Why We Wait
Procrastination is all too common in this area.
For many, disagreement on individual desires will paralyze the estate planning conversation and nothing gets done. The 55% of people without wills prove that.
Beyond that, most parents of young children don’t think they need a will, especially if their retirement accounts have a beneficiary assigned.
But for all you Gen X and Millennial parents out there, move estate planning up your priority list. Thinking through the care for your children after you’re gone may present tricky conversations but minimizes complications if the unexpected occurs. Oral agreements are nice in theory but can play out much uglier when you are no longer here.
Remember, the person/persons you choose are not etched in stone. They can always be changed. Otherwise the court will decide and intestate laws will determine who is the best caretaker for your children.
3 Things to Consider When Picking A Guardian
- Some of the toughest questions clients have wrestled with arise when family does not live close to the couple. Along with the loss of their parents, the children would be moved and have to make new friendships.
- Many young couples default choice are either the husbands or wives parents as successor guardians. However, the age, health and mobility of the parents should be considered before selecting them. While they love being grandparents, they may not be able to physically handle young children (particularly babies).
- In the event, you are not picking a family member, make sure to get approval from the person/couple before adding them as a guardian. But as time passes, your opinions may change. This New York Times article had some good questions surrounding what happens when you’ve selected a couple as a guardian prior to them having children. Your opinion can change after you see how different their philosophies of raising kids are from your own. This could create an awkward conversation down the road.
Odds Are Low
Because young parents are rarely without their children, the odds of an event happening that would trigger the estate plan are extremely rare.
It’s also likely that most of a couple’s savings is in retirement accounts with the children listed as contingent beneficiaries.
But when completing your estate documents, it’s important that an attorney uses language to assure that a minor children’s trust is set up so that you can extend withdrawals over your children’s life expectancy.
You can then use this language as the new contingent beneficiary.
Practicing What We Preach
So this year, we made a point to make it official. Shortly after January 1, we made an appointment with an attorney and not only picked a guardian, but also secondary guardians.
As a financial advisor, I needed the help of other financial planners to coach us in to making things official.
Have you been stuck in your estate planning process? Take some time to review and check this one off your list.
Getting it done actually does feel better than you might think.