Estate planning for parents with young kids

Diapers, bottles, nap times — parents agonize over their children’s every need. Many are so busy taking care of their children that they put off estate planning, and some parents believe that they do not need a will since they don’t have substantial assets. But one thing is certain: every parent should have legal documents in place to protect the family. Here’s five things you should look into when considering your family’s future in case you or your spouse — or both — dies:

Wills and trusts

Your will dictates how you want your assets distributed after your death and who you want to serve as the guardian of your children and trustee of any money for their benefit, giving you control over how and when the money is distributed. Your will should specify that any property passing to a minor be held in a trust, the terms of which are set forth in the will, since children under the age of 18 in New York cannot directly own assets.

The trust becomes effective at your death, and will hold the assets for the children. A designated trustee administers the trust and makes those distributions. You can specify in your will what the trust can and cannot be used to finance, how much can be used for college.

Pick a caretaker

The most common reason parents start thinking about estate planning is their concern about who will care for their children in the event that both die, but is often the biggest stumbling block to writing a will, as spouses sometimes can’t agree on a person.

Factors to consider include the person’s existing relationship with your children; his willingness to accept the responsibility; his existing family and living situation; where he lives; whether you anticipate that he will maintain relationships with both sides of the family; and whether he can meet the physical and emotional demands of being a guardian.

You should also reevaluate your pick every two to three years, taking into account major life changes such as a birth, death, disability, or divorce. Have at least one or more alternate guardians in the event that the person you selected is unable to act as guardian.

The court has the ultimate power to approve your appointment, but it usually chooses your pick unless it finds your choice is not fit to serve. But if you fail to appoint a guardian, a court will appoint one for your children.

Life insurance

School, sports, and summer camp are all significant expenses, and parents can’t afford them in the event of their death.

That’s where life insurance comes in — and your plan should take into account things you pay for now, and things you’ll have to pay for, like college. You should also consider money needed to pay off your mortgage.

Life insurance is as critical for the non-income producing spouse as it is for the breadwinner. Usually, that person is the caregiver for the children, so if that person dies, money will be needed for childcare.

Disability insurance

Disability insurance replaces earnings lost because you are unable to work. Although most people are focused on life insurance, disability is more probable than death while your children are under the age of 21.

Beneficiary designations

Certain assets like retirement accounts and life insurance are dealt with outside of the will.

Those assets require a designation of the “beneficiary,” who inherits those assets at your death. It is critical to review all your accounts and ensure all beneficiary designations are up to date.

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As with all legal matters, you should consult an attorney to make sure that your documents meet your needs. Without legal insight, you may make mistakes that undermine your plan.

Alison Arden Besunder is the founding attorney of the Law Offices of Alison Arden Besunder PC, where she assists new and not-so-new parents with their estate-planning needs. Her firm assists clients in Manhattan, Brooklyn, Queens, Nassau, and Suffolk. You can find her on Twitter @estatetrustplan and on her website at www.besunderlaw.com.Disclaimer: This column is provided by the Law Offices of Alison Arden Besunder P.C. and New York Parenting Media as a public service to inform readers of legal issues. It is not intended to advise. Since legal issues vary with an individual’s situation and needs, one should consult with an attorney. It is impossible to cover all aspects of the law in an article. Please be advised that the laws are constantly changing. The content in this article reflects the current law. Nothing contained in this article is intended as advice and does not create an attorney-client relationship between the reader and the firm. Individual consultation with an attorney is required to determine the specific facts and circumstances of any particular situation. A written retainer agreement between you and the firm is required before any attorney-client relationship may be created. Circular 230 Disclosure Notice: To ensure compliance with Treasury Department rules governing tax practice, we inform you that any advice contained herein (including in any attachment) (1) was not written and is not intended to be used, and cannot be used, for the purpose of avoiding any federal tax penalty that may be imposed on the taxpayer, and (2) may not be used in connection with promoting, marketing or recommending to another person any transaction or matter addressed herein.