When people think about estate planning, the first thing they often think about is wills. Ideally, every adult, especially those with minor children, should have a will. But whether you already have a will that you are thinking about updating or if you are writing your first will, here is a short list of things to consider:
- Guardians: First and foremost, if you have minor children, your will is going to name one or more guardians who will step in and take care of your children for you if you pass away. The other natural parent is most often the first choice as they are already the child’s legal guardian. However, you should consider at least two backups. Some things to consider might be a desire for your children to be raised in a particular religion or a particular geographic location, or the ability to visit with each side of the family with ease. You may also consider which living situation will cause the least amount of disruption to your children at a time in their lives that will already be exceptionally difficult. The natural choice will be different for each situation, but we often see clients look to their own parents and/or siblings to serve in this role.
- Personal Representatives: This is the person who will present your will to the court after your death and make sure that your wishes are followed. They will be responsible for distributing your property to the people and/or charities you have listed in your will. Considerations here might be physical proximity to you, but it could also be someone out of town who would be willing to come into town and take care of all of the necessary paperwork as needed. You might also consider choosing someone who is organized and who has enough time to devote to the role as it can be somewhat demanding.
- Beneficiaries: Beneficiaries are the people and/or charities who will inherit your property when you die. Often this is a spouse followed by children, but it can also be siblings, friends, charities, or anyone else you desire. Even though it may be uncomfortable, it is important to think through each scenario as you consider them to decide what happens to your property if your first, second, and third choice beneficiaries were also to die. For example, if your beneficiaries are your spouse and children, what would happen if all of you were in a common accident? It is also important to think about whether assets you leave to a beneficiary should be left to them outright or in trust form. Trusts should always be considered for any minor beneficiary and for any beneficiary with special needs. Trusts may also be considered if you are concerned about a beneficiary’s creditors, personal/professional liability, and/or a potential divorcing spouse.
- Making it all work together: Finally, once you have a plan in place, it is important to make sure that all of your beneficiary designations on life insurance and qualified plans, as well as any payable on death or transfer on death designations, joint ownership, beneficiary deeds, or other forms of ownership on assets all direct your assets to pass in the same way as your will so that your wishes will be consistently followed.
It is never a fun process to think about your own death, but it is a very important step to take in ensuring that your loved ones are taken care of so that there is one less thing to worry about during an exceptionally difficult time in their lives.