Estate Planning and Kids: Open Thread
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Have you been on top of your estate planning, ladies? Once you have kids it certainly feels like a pressing issue — and yet my husband and I still haven’t sat down with a lawyer to get our wills or other details buttoned up. Whoopsies.
We’ve talked about getting your accounts in order for labor, but estate planning is a bit bigger than that — and it can change with each birth depending on how things are worded and what other situations are (family members living, dying, etc.).
How did you find your lawyer for a will or trust? What other estate planning did you do — and did you find any service that simplified it? (Wouldn’t it be great if there were something like MissNowMrs for estate planning for parents?)
What Mr. G and I have done:
Term insurance (20 year), which we bought almost right after J was born. Our rates are probably higher than they might be otherwise because we both had a ton of extra baby weight on us. We originally were insured for some huge amount; after our second yearly premium came due we dialed it down so that the mortgage is covered if either of us die, which at least means the remaining family won’t be forced to move quickly.
(Yes, yes, we can always retake the health test portion to lower our rates — and I will go to that trouble riiiiight after I finish that marathon.)
Changed beneficiaries on accounts: Some banks make it very easy to do this — if memory serves, Vanguard and Fidelity both had a “per stirpes” option, meaning anything in the account would be distributed equally among my surviving kids. With Charles Schwab it was a bit more complicated, but that may just be my situation.
(One of my investment accounts was opened by my father for me as a college graduation gift; when I last looked into it he was still listed as a joint tenant and putting either my husband or the boys on the account would require lots, and lots, of paperwork… that I have yet to sit down and do.)
Guardianship discussion: We’ve mentioned briefly to our family members who we’d want to care for the kids in case of our deaths. That’s a fun conversation, let me tell you.
This doesn’t really count as estate planning, I don’t think, but long before I was married or pregnant I set up a living will through Legal Zoom, inspired by my grandfather’s death — his living will really did come into play.
If you’re pregnant it might be worth looking into — I had strong opinions on that tragic circumstance where you have to choose between the mother’s life and baby’s.
It was all hypothetical at the time I set it up — I wasn’t even dating anyone, let alone pregnant! — but it made me feel a little bit better in case the situation arose and I wasn’t able to communicate my desires. (You get a little printout to carry in your wallet. Fun!)
All right ladies, over to you — what kind of estate planning have you done? Do you feel well prepared or are you still kind of scrambling, like we are?
Further Reading on Estate Planning:
- Young Family Estate Planning [The Virtual Attorney]
- Wills and Estate Planning: DIY or Not? [Parents]
- Estate planning: Why young families need to do it [Denver Post]
- Estate Planning When You Have Young Children [NOLO]
- 6 Estate Planning Tips for Families [PEPS]
Pictured: Shutterstock / Peter Mayer Fotos.
This has been such a helpful thread. I need to start looking for an estate planning attorney. I take it I should look for someone locally… but we’re planning to move to another state in the fall. How much of estate planning is dependent upon local laws? Will we need to get things updated when we move to another state?
Does anyone happen to know of an estate planning attorney in Sarasota or the greater Tampa Bay area?
As a probate and estate planning attorney I highly recommend setting up a will with a children’s trust if you have minors. Your will can be drafted to encompass future children, so there really is no need to put off estate planning because you aren’t done having kids. Another thing to consider when making beneficiary designations and guardianship considerations is how your kids will be financially cared for before they turn 18. If you leave money (either through beneficiary designations, in your will, or if you die without a will) outright to your child it’s likely going to be put in a court directed trust that your child’s care taker may not be able to access to help pay for the expenses of raising your child. Even if you have a guardian who is able to financially care for your child without relying on money from you, you may want to make some additional money available for education, extra-curricular activities, vacations, or other above and beyond expenses. Any money you spend doing estate planning now will end up saving that much and more for your children after your death.
We just finalized our estate paperwork a few weeks ago – will, power of attorney and healthcare directive. Need to get on the life insurance. Our oldest daughter is almost 4, so we delayed this for far too long.
White coat investor has a great blog on what to look for in insurance policies, etc.
Rule of thumb is that you want the life insurance to ensure expenses are taken care of until your kid(s) can self-support. Income multiplier is not a great benchmark because savings rates vary widely.
For us that meant:
Paying off mortgage (7 figures, median in HCOL area)
College/other tuition (estimated mid-6 to 7 figures in 18 years)
Living expenses, child care ie nannies, or whatever is needed so the surviving spouse can work (annual estimate x 15-20 years)
So our policies ended up being far above the 8-9x annual income rule of thumb that I see frequently.
I’ve been meaning to do all this forever, but fail at follow through… Does anyone have an estate planning attorney they recommend in the DC area? We have discussed a lot of these topics and do have substantial term life insurance, but need to get everything on paper.
Re: beneficiaries and joint tenants on accounts and all of that
When my dad helped me and my sisters set up bank accounts and investment accounts and even a safety deposit box, we also put him on those things to make it easier for my parents to have access if I ever needed it, which was great and all, up until he passed away a few weeks ago.
We all kept putting off taking my dad off our accounts before he got sick because we never thought it was going to be an issue. I eventually had him taken off when I got married and put my husband on at the same time but not without some stubbornness from my dad of not wanting to actually fill out the paperwork and get to the bank in person.
The issue arose for my sisters when my dad passed because there was an apparent misunderstanding at the bank when they signed up over who should be owners on the accounts and who should be signers. Long after my dad should have been taken off their accounts, he wasn’t, because they were all just lazy when it came to the paperwork. My sisters got locked out of their bank accounts because my dad was the owner (which made sense at the time they opened it because they were still young) and the bank had to wait until letters testamentary were produced and all that. Yea, it would have been somewhat of a pain to get my dad off of the accounts when he was still alive, but it became an even bigger deal later.
Tl;dr – Please please please no matter how much paperwork is involved, it’ll make the process easier if it’s taken care of the way you want it to be before you don’t have the choice.
Random fun fact – in Ohio they ask you at the BMV if you have a living will and power of attorney for healthcare and if you they will add a symbol to your drivers license (along with the organ donor symbol). They also ask if you want to add 2 contacts as next of kin to your license information.
We don’t currently have a living will, although we probably should because we have specific views that my in-laws probably wouldn’t share. But other than the symbol on your license, how do you communicate the living will to your family? I guess what Kat is saying about a card in your wallet probably makes a lot of sense.
ETA- just did some googling and it looks like I can add my living will to my e-chart at the major medical centers nearest us (I have e-charts in both systems since I’ve seen doctors there), and Ohio has a form that simply needs to be filled out and notorized. I may do this and encourage my husband to do the same.
Question – hospitals are required to follow the advanced directive by law, yes? My concern is that the nearest hospital to me is a Catholic hospital and I’m not sure that they would follow my wishes – or, at best, would try to talk my next of kin out of it.
That is absolutely estate planning!
I’m an estate planning attorney, and I set up wills, health care and financial powers of attorney for both of us before we had our first kid. We’ve doubledchecked that each other are listed on our retirement accounts, and dealt with contingent beneficiaries appropriately.
For insurance, we each have term and small whole life policies. We got whole life policies for the kids, too, with a rider that allows them to increase their coverage at various times (e.g. age 20, age 25, etc.) without a health test. (My husband has a chronic health condition that has a genetic component, so that was a concern for us.)
One note: Beware Legal Zoom, and other “pro forma, create your own online” documents. I can’t tell you the amount of work I get from folks who don’t realize that those online documents don’t comport to the specific requirements of our state, rendering them invalid. (This goes for estate planning, contracts, leases, etc.) You get what you pay for, and finding a reputable estate planning attorney is worth every penny!
We each have term life insurance policies that we just updated (20 years me, 15 years him – he’s older and pricier). Amount is $1 million each. This is about 8-9x our individual salaries.
We worked with an estate lawyer who was wonderful at explaining all of the details and implications of each decision. I think we paid $1700 for the full suite of products and that includes keeping the originals in the firm vault, paying the annual premiums on life insurance (because it’s owned by a life insurance trust that she advised us to set up and so we can’t pay the premiums ourselves so we send her a check and she sends a check from the trust) and minor updates forever (e.g., change of guardians), and it was worth every penny. The documents include:
– Will
– Medical power of attorney
– Power of attorney
– Medical trust
– Family trust
– Irrevocable life insurance trust
– Possibly others! It’s been about 4 years now so I can’t remember why all the trusts or what they all do but it made sense at the time. The language includes future children so we don’t have to update.
The hardest decision was guardians for the kids. My mom is getting older and wouldn’t be able to keep up with the kids and frankly although she is an awesome grandmother, wasn’t the best at parenting. His parents are too old and not interested. My sister isn’t responsible enough. His sister hates me and has 3 kids of her own and isn’t in a financial situation to take on our 3 kids…I’m sure she would get over her hate if something horrible happened but why have my kids raised by someone who didn’t love me? Plus, seriously, adding 3 kids to her 3 kids? And, we have really different financial conditions: DH and I have consciously lived simpler lives so that we could save and and have financial security – we are very comfortable now, and each have $1 million life insurance policies. So, our kids are hopefully going to be taken care of financially, and her kids…who knows. There are other values differences as well.
We don’t have a lot of very close friends who we would trust with our kids but we did pick one couple who has two kids of their own. They are our closest family friends but the situation is not ideal – they live on opposite coast, are very close to their own extended families, and are a bi-ethnic family but from two different cultures than us, so raising our kids would be extra challenging. The solution is that we just can’t die. And that is how I work myself up into anxiety.
But seriously, having the documents gives me so much peace of mind so I don’t even think about this very much. Just do it.
With regards to Guardianship, two scenarios:
My husband and I are in line to be guardians to very close friends’ kiddo. Our friends really struggled with what to do as far as guardianship – they each have one sibling and decided to go with friends over family. In their situation, grandparents were out for ‘political’ and health reasons, other available family was either too young/immature to make good guardians and the one close family member who has a child was not someone they felt comfortable leaving their kiddo in the care of.
We have decided on my sister and her husband. It was an easier decision than most people have it because they share our values and are very close with both our families.
And seriously- if you are TTC, GET LIFE INSURANCE NOW. I didn’t heed that warning and now am a ‘less desirable’ candidate because of hospitalizations related to pregnancy and childbirth. Oh, it was also AWESOME to get that insurance physical 4 weeks after having a baby and 12 pounds above my normal weight…
As an estate planning attorney AND the mom of two littles, I really encourage families to go visit an estate planning attorney. NOT an attorney who “does wills” and not someone who “does trusts” with a hard-sell, but rather someone who actually talks to families about what to expect and what works best for them. At a minimum, it’s worth knowing who you should put in your line-up of people to help out after you die – executor, trustees, guardians, etc, and an attorney can help you work through those decisions. And yes, PLEASE get some life insurance for income replacement, or for any non-working spouse, to cover the on-going costs of child care for the working spouse. I’ve worked with young families after the death of a spouse and in every case life insurance makes a huge difference!
We’ve done about half of what should be done. My DH is pretty much unable to get term life insurance, so he takes out the max through his work that he can without need for a physical exam. To compensate as best we can, I have term insurance such that if we both were to parish, the kids would be fine. As for guardianship, its tough. We are close with my family but not with his. We have my mom as guardian for as long as she is able, then to my sister. We decided best just not to raise it with his family. We have a simple will but would benefit from actually going to an attorney.
We just did all of this and signed all of the papers last week. My daughter is about to be 8 months. We found a local attorney through a parents listserv in my neighborhood and he was great. He’s part of a 2-person firm that’s been in my area for ages and it was easy and straightforward. We have a basic estate – life insurance and retirement accounts – so we picked an executor, a trustee, and a guardian. The paperwork itself was easy.
We struggled with the guardianship issue a bit, because all of our siblings/parents have something a little objectionable about them. That sounds awful, but our parents (all in their mid-60’s) are starting to decline in health and energy levels, both me and my husband find the attitude of his brother/SIL to be offensive (hard to explain, but he’s very rude to his parents and I couldn’t even begin to stomach the idea of him taking care of our daughter and being rude to my family members if me and DH were both dead), my brother is really immature, and my sister has a bit of a temper and wants to live this very nomadic life abroad.
We also considered asking close friends to be guardians (and our daughter wouldn’t be a financial burden), we also evaluated whether we could really ask that of our friends and also whose values we’d want to be passed on to our daughter. In the end, we chose my sister as guardian. We couldn’t really see asking a friend to take our child in when we had capable family members, and I think that of our family members her values and ability to take care of our daughter most closely align with ours.
We haven’t done anything yet – and it crosses my mind frequently. I do have term insurance through my employer, as well as a small life insurance policy. DH also has a policy. They are minimal, but would probably help the survivor keep the house and find childcare (DH is a SAHD, so childcare would be a new expense).
We are struggling with how to decide who to name as guardian. We currently only have a one year old, but hope for a couple more. We each have one sister, both married, both with two kids. DH’s sister has two teenagers and her husband has a very comfortable income.. My sister has a toddler and an infant and between her and her husband they make enough – they cover expenses and put a little in savings but they are frugal and don’t splurge. Financially, my SIL is better situated to care for any of our children (who would have very little, as I both our savings and insurance policies are pretty bare bones). But neither my husband or I agree with her parenting choices – we’re deeply concerned with the behaviors and attitudes she permits in her own children, and know that isn’t something we’d want for our children. We are much more inline with my sister’s parenting philosophy and would feel more comfortable with her raising our children. But we worry about the financial burden when we know we won’t be able to leave much to help care for them.
What advice do you all have on how to select the right guardian for your children? Should it all be about the numbers, or do the “intangibles” of things like parenting philosophy matter too?
We went through all the estate stuff (life insurance, wills, trusts, guardians) within a year after our first kid was born. Our documents used language that encompassed any potential future children so we didn’t have to make edits, though obviously we should be reviewing these items periodically.
We did struggle with where to place our kids should something happen to both of us. Each of us has one sibling. Mine doesn’t live in town and isn’t responsible enough — nor are we close enough — for her to be in charge of my children. DH’s brother lives in town and our kids are close with his family, but my in-laws’ values/child-raising strategies are not similar to my own. We settled for a very close cousin of my husband’s (and his wife/family) — they live nearby and most closely mirror our own parenting values and style. But that was a tough series of conversations.