As parents, we’re often preoccupied with numerous responsibilities from just the right Halloween costume to helping with homework. However, there’s another crucial aspect that parents of young children need to consider: estate planning.
Without the right legal documents in place, you risk your kids being placed in child protective services in the short-term followed by a potentially lengthy and expensive court process to decide who will take care of your child. That’s why having legally valid short- and long-term guardian nominations in place are crucial.
Planning can ensure that the family and friends you trust most and share your values raise your child if you’re ever unavailable and also provide for confidential guardian exclusions if there is anyone who might potentially contest guardian nominations.
Sometimes it’s tempting to take shortcuts and all too often we see a couple of common mistakes.
The First Common Mistake: Not Having Asset Protection
The first mistake is designating a family member to receive your money on a beneficiary form but that doesn’t guarantee your child’s care. That money will be given to the named individual outright with no asset protection, which leaves your hard-earned money and your child’s well-being subject to the potential risks of bankruptcy, divorce, legal disputes or acts of bad faith.
The Second Common Mistake: Designating a Minor Child as the Beneficiary
Another common mistake is to designate a minor child as the beneficiary for retirement accounts and life insurance policies. Minor children cannot inherit the money and the court will designate a financial custodian if you don’t do the critical planning ahead of time.
A thorough estate plan can make sure you are making the legal and financial decisions for your kids instead of the courts.
Proper end of life planning is the most important thing you can do for your child. It’s the only way to ensure your kids are properly taken care of if anything happens to you.