Being a mother is perhaps the most exhilarating experience in a woman’s life. As you find yourself in charge of your child’s life, you also get to manage your young one’s future through various legal and financial instruments.
By providing funds to living expenses in all stages of their lives, wills, trusts, insurances, and savings can all help future-proof your child’s life ahead. These elements are the key to estate planning—which safeguards your children in case the inevitable happens.
This article will discuss what moms should know about planning for their children’s future.
What Is an Estate?
Most moms may think that estate planning is only for the rich and famous. Nothing can be further from the truth. Estate refers to all properties and assets owned individually and jointly by an originator. These include anything of value such as bank accounts, stocks, dividends, real estate, jewelry, retirement accounts, and insurance. Before drawing out a will or any document, it’s best to discuss with an estate planning attorney from www.mccunnlaw.com and others near you to understand more about how estate planning works.
Estate Planning Documents and Instruments
There are a few tools you can use to secure your children’s future. Below are a few examples:
1) Trusts
This type of legal agreement can give you better control over the distribution of your estate. Trusts take effect while you’re still alive, enabling you to make better decisions about how and when your children will receive the assets covered. Unlike wills, though, you can avoid probate expenses with revocable trusts while irrevocable trusts can keep your estate taxes down.
2) Wills
A will is defined as a legal document that includes a deceased’s wishes after their death. It often describes how a person wishes their estate to be distributed when they’re gone. In cases where the children involved are minors, the originator will have to appoint an executor to ensure that everything is in order. You can also name the guardian to take care of your children in case of you and your spouse’s untimely demise. A probate attorney will help the executor to settle the estate – it is always best to seek professional trusted help when dealing with the legalities of a will.
3) Savings and Retirement Accounts
You can save up for your children’s future when they’re born or even before that. Otherwise, set up a retirement account you can use once you get older and no longer work. An individual retirement account (IRA) works as long-term savings account that you can withdraw after reaching a certain age, generally 59.5 years old.
For employed mothers, you may have access to a 401K account offered by your employer. It works the same way as an IRA, which you can access through multiple financial institutions. The good thing about these financial instruments is you can transfer them to your children if you and your spouse pass away.
4) Insurance
Getting life insurance is another element that you can include in estate planning. Numerous products fit your needs. For life insurance, you can choose either a term or permanent coverage. As the name suggests, term insurance has lower premiums and limited effectivity, often one year. You have to renew the policy as it expires and aren’t entitled to a payout if you can’t use the policy.
On the other hand, permanent insurance often has a cash component you can use to withdraw or borrow. When you die, the insurance company will award the amount to your spouse and children if you named them as your identified beneficiaries.
Primary Considerations in Estate Planning
Before drafting a will or a trust, it’s essential to identify a person whom you can trust to care for your children after you’re gone. If you fail to recognize a nominated guardian in your will, the state will do it for you.
Similarly, you have to name an executor whom you can trust so your children can get all your assets and properties accordingly. Apart from a family member, you can also assign a lawyer to carry out your wishes and avoid the chances of family conflict.
Final Thoughts
Estate planning is a critical part of ensuring your children’s future. As a mom, you have to guarantee that your kids live comfortably and without significant problems. You can achieve this in many ways—some of which are discussed in this article.
Also, if you want to ensure that your child receives all your estate, update the names of identified beneficiaries in your retirement, bank, insurance, and all other accounts because these institutions will pass on the cash to your identified beneficiaries. Make sure all your financial accounts are updated as early as possible.
