A Basic Guide to Estate Planning for Young Families

December 30th, 2015

Every individual owns an estate, no matter how large or obscure it might be. What most young people fail to understand is that preparing an estate plan early on helps to lay a secure foundation for their family’s future. Why? Because you’re providing for them and ensuring your legacy will live on when you’re no longer around.

Why Do Young Families Need Estate Planning?

We live a competitive world, where one needs to constantly work hard to make ends meet, especially for a family that’s just starting out on their journey together. You wouldn’t want your loved ones to face hurdles in case something happens to you, would you?

Estate planning safeguards your loved ones, and helps you establish a concrete strategy that’s in perfect sync with your family’s current financial situation as well as future requirements.

Here are some basics about the process of estate planning:
  • Understand What Constitutes Your Estate and Your Responsibilities

Estate planning basics require a thorough assessment of overall assets, income, expenditure and other liabilities, as only when everything has been accounted for can you set procedures in place to ensure a realistic outcome. With in-depth detail, it becomes possible to assess future financial requirements, and create various investment plans to bridge the gap.

Family estate planning typically utilizes wills and trusts to structure a plan for asset management, in order to provide for loved ones, as well as shed light on important matters that need to be addressed (like funeral arrangements).

  • Extra Protection for Your Partner

Both spouses work hard at building and maintaining a happy home, but a homemaker is financially dependent on their spouse, unless they are both earning through full-time or part-time jobs.

Either way, you need to consider saving for a non-working spouse or one who does not bring in the same income as you. When you’re sitting down to chart out an estate plan for your family’s future needs, make sure your surviving spouse will be able to continue making ends meet if you’re gone.

  • Support for Minor Children

In case something happens to both parents, a minor child is most at risk. Through wills and estate planning tools, parents can provision for minor children and avoid possible court probates that could affect them negatively. This can be done by choosing a suitable guardian well in advance, who will be able to provide and care for them as you do.

  • Provisions for Adult Children

Parents also need estate planning for adult children, both for those who can take care of themselves, and more importantly, for those who may require assistance. Adult children who have special needs, are not ambitious or extremely bright, and/or indulge in bad habits, may require a lot more support than those in a position to make their own living and important decisions.

  • Insurance Planning for Financial Security

Investing in life insurance is a priority in any estate planning strategy, helping you secure the financial future of family members and creating a reserve of finances for future needs. It can also help pay off off accumulated debts and taxes, as well as replace a deceased family member’s income in case they die prematurely.

  • Various Documents Used for Estate Planning

When structuring an estate plan, you need to pay attention to which estate planning documents are right for your family’s needs. These help you plan for the future by being in a position to judge various decisions that need to be made after your death. Medical and financial power of attorney, irrevocable trusts and other documents play a substantial role in overseeing a well-executed estate plan.

  • Look into Tax Breaks

Every estate plan needs to be structured in a manner that avoid estate tax as far as possible, while keeping your family’s financial goals in mind. With a solid understanding of current and future goals, it becomes easy to chart out a plan that evades debt and reduces taxes, simultaneously doing justice to the beneficiaries of your estate.

  • Make the Right Decisions Now

Supporting a family is not easy, and it’s important for young families to consider saving extra in a substantial estate plan. Investing both time and money in proper estate planning offers huge payouts for your surviving family’s financial security and wellbeing. A well-established estate plan will require the expertise of an experienced financial advisor and a trustworthy lawyer, besides trustees, guardians for minors, etc.

  • Ensure the Plan is Implemented

Implementation of an estate plan requires carefully revisiting every aspect every now and then, so as to keep all the details up to date. Estate planning documents may need to be changed every time important decisions are made, which may comprise of additional beneficiaries, changing of accounts, increase in assets, etc.

A lot of patience and hard work goes into building an estate and safeguarding it, especially for young and ambitious families. With the right estate planning today, you can help keep your loved ones on a solid financial footing no matter what happens in the future!