Looking to simplify the legal and financial to-do lists that have been stacking up over the years? Look no further than our friends at Briefly, the future for legal and financial primary care. They are hosting a free virtual Legal and Financial Crash Course on May 20th at 12pm ET and 9pm ET that will leave new and expecting parents feeling like brilliantly prepared rockstars. Here, they drop some knowledge on the importance of estate planning for new parents.
Don’t think of “Estate Planning” as one of those annoying and expensive things you need to do once you become a parent. Estate planning is actually a bit magical and can be incredibly empowering. It gives you the power to time-travel to protect and take care of your family’s future – and provide you peace of mind that your kids, spouse, partner, or other loved ones will be secure if you die or become incapacitated.
What is an estate plan?
An estate plan is essentially a set of instructions for how our assets should be distributed when we die, and how our obligations to others should be distributed when we are no longer able to do so. We all have responsibilities in our lives – some of us are parents or caretakers, business owners or homeowners, and most of us have debt of one kind or another – these responsibilities do not disappear when we die. They shift to our heirs.
Estate planning is a set of strategies for shifting responsibilities and minimizing the burden of those responsibilities.
What can an estate plan do?
1. Appoint a guardian for minors. The number one thing that an estate plan can do for new parents is appoint a guardian for their children should they pass away. This is in fact the only way to do this (using a will).
2. It allows you to decide who will receive your assets when you die.
3. And how they will receive them – either outright or in trust.
4. Allow you to decide who will be responsible for making sure that your estate plan is followed.
5. Protect your assets from creditors. This means that estate planning can help ensure that your debts go away when you die and don’t become the responsibility of your kids (including things like credit cards or student loans.
6. Protect your assets from the creditors of your heirs – making sure your kids’ inheritance doesn’t go to pay off their $300,000 student loans!
7. It allows you to replace lost income (and continue to pay a mortgage); yes, your estate plan can actually create money for your family, with a simple term life insurance plan.
8. It allows you to do tax planning. There’s a really good chance that the estate tax exclusion – the size of an estate that will be taxed – is going to go way down under the Biden administration. Even some middle-class families might be impacted. An estate plan can help you do what all the corporations do – lower your tax bill in a completely legal way!
9. It makes sure that your burial wishes are honored.
10. It makes sure that your healthcare wishes and end-of-life wishes are honored.
11. It makes sure that your finances and businesses are managed if you become incapacitated.
12. It allows you to protect your digital assets, like social media accounts, photos, online businesses, etc.
How to get started
The best thing you can do to get started is to come to a free Briefly webinar! But, after that, we think that every parent – regardless of your income level – should have a lawyer create an estate plan for them. Online wills are tempting because they are relatively inexpensive – but they are often low quality and, critically, they don’t manage the signing of the will. This is a hugely important part of creating an estate plan – in fact, the whole probate process is about proving that a will was lawfully signed. We think that appointing a guardian for your kids is so important that it’s worth investing in.
So, hire a lawyer. A basic estate plan – which should include a will, a simple trust, a power of attorney, and healthcare proxy, for you and a spouse or partner – does not need to cost very much. Pro tips for saving money:
1. You don’t need to hire a lawyer in a big city – you’re just paying extra money for their rent. Call a lawyer in a small town. Up here in the Hudson Valley, plenty of lawyers will do solid estate plans for $600.
2. Negotiate payment schedules – plenty of lawyers will negotiate on fees or agree to payment schedules – that $600 could become $100 per month for six months, or even $50 per month for a year.
3. Don’t get fancy! You can start with a simple plan and a term life insurance plan. If you want to do some complex estate planning later, you can always upgrade your plan.
We know estate planning can be intimidating. Thinking about… well, death, money, family, and taxes is not exactly fun. But just remember – estate planning is an incredible set of tools to help you look after your family. Become a time-traveler and take care of your family’s future by getting started on your plan now!