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  • Writer's pictureRoch Clapp

Estate Planning for Young Families

A common misconception regarding estate planning is that it is not necessary for young people.  Usually young couples believe it is too expensive, that they are healthy, or it is not important until they have assets.  Young families often do not realize just how important estate planning is when their children are minors.  It is always best to have a plan set up to ensure that your desires and wishes for your children are met in the unfortunate event that you or your spouse are not alive to care for them.  Below is a list of some of the important items to consider if you are a family with young children.

1.  Life Insurance.  Young families often have a mortgage, student loans, car payments and other debts and obligations.  In today's world both spouses are often working and both paychecks are needed to meet the monthly expenses.  What would happen if you died and your spouse was responsible for the mortgage on his or her sole paycheck?  Not only is your spouse grieving but he or she is now under a lot of stress to try and make ends meet.  Term life insurance can provide your spouse with a little cushion to help alleviate the debts.  The same is true if you have minor children.  In the unfortunate event that both you and your spouse were to die you want to make sure to leave behind assets that can be utilized for the care of your minor children. Life insurance is a way to leave funds to provide care for your children and not place a financial burden on the people caring for them.

2.  Guardians.  A guardian is a person that you designate to care for your minor children in the event you and/or your spouse are not able.  This is a very important decision that needs to be made and the nomination can be included in your will.  By making the choice you are ensuring that the person you want to care for your children will be doing so.  Selecting a guardian will also prevent disputes between your surviving families as to who will care for your children.

3.  Wills and Trusts.  Not only is it important to select who will care for your children upon your death it is also important to appoint a personal representative or trustee to administer your estate and/or trust.  This is a fiduciary position and you want to place someone in the position that you can trust.  Your will or trust will also direct how your assets are distributed.  It is necessary to have any inheritance to a minor child be managed by an adult, be it a conservator or a trustee.  A conservator is court appointed and will be in charge of your child's inheritance until your child reaches age 18, unless the conservatorship is extended to age 21.  You can nominate a conservator for your children in your will or trust.  Another option is to have your child's inheritance be held in a trust for your child's benefit.  The trust allows you to dictate what expenses should be paid and for what purpose.  You can include provisions for distributions for birthdays, holidays, marriage and graduation from college.  You can also have provisions that restrict distributions in the event your child is abusing drugs or alcohol or not meeting education goals.  The trust can be in your will or in a family trust and would only become effective on your and your spouse's death.  

4.  Beneficiary Designations.  It is important to make sure that all your beneficiary designations on your life insurance, annuities, and retirement accounts are up to date and current.  Never name a minor child as beneficiary of a life insurance policy or other assets that requires a beneficiary as the child will not be legally capable of receiving the proceeds without appointment of a conservator.  If the child inherits the assets outright through intestacy or beneficiary designation, the child will receive full access to the funds between ages 18 and 21, but not later.  It is a better idea to instead coordinate the beneficiary designations with a trust established for the child. 

Parents with young children should consider drafting an estate plan to ensure that their estates are administered according to their wishes, and that their children will be cared for financially and be placed with an appropriate guardian.  

This article is not intended to replace legal advice applicable to your situation and should be used only for informational purposes.  Because of the complexity of the law, please consult with your attorney for proper guidance. Ms. Soyer is an associate attorney with the firm of Sandra L. Clapp & Associates, P.A. and can be reached at or (208) 938-2660.

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