Did you know that your estate plan could protect your children and their needs if you are hurt or pass away? Your estate plan can include a guardianship that assigns a guardian in the event that you or your children’s other parent cannot care for them. It can also help you set up a trust to make sure your children have the money they need if you pass away.
Setting up guardianships will let you choose a specific person who you’d like to have take care of your children if you cannot and their other parent is also unavailable. You can select a family member, friend or other party who you believe will provide for your children in the way you’d have if you could raise them yourself.
Trusts are also beneficial, because they give you a place to put assets. For example, if you set up a trust for your children and make it so the trust will hold your life insurance benefits, then those benefits will be held until specific requirements are met. For instance, you may say that you want $500 to be paid to each child monthly until your children are 18 and then to distribute the rest equally. You could also state that you don’t want the funds to be distributed until your children get married or go to college.
Why use your estate plan to address your children’s needs?
While it’s true that there are several ways to make sure your children are cared for if you’re incapacitated or pass away, you don’t want to leave your children’s future to chance. While you may have people who say they’d care for your kids, the reality is that the court gets the final say. If you haven’t set up a guardianship, then your kids’ futures will rely on someone going to court to seek guardianship and the judge agreeing.
With a trust, you can protect the assets you want to pass on. Without one, that money may be largely uncontrolled, leaving open the risk of it being spent down faster than it should have been.