We have been married for a few years and recently had a baby. Is it important that we have an estate plan?
Congratulations on your growing family.
While many think that estate planning is just about dealing with potential estate taxes, there are several other issues that are probably currently more important than potential estate taxes. Here are some of those issues ranked in priority for a young couple with a new child.
1. Power of Attorney for Health Issues
This document names a person to make medical decisions if you are not capable of making those decisions yourself. For example, if you were in a coma, who would make medical decisions regarding your treatment? Usually, a spouse is named with another person also designated if the spouse cannot make those decisions. (Many people also create a “Living Will” at the same time that details their wishes for end of life medical decisions.)
2. Power of Attorney for Finances
This document names a person to make financial decisions if you are not capable of making those decisions yourself. Usually, a spouse is named with another person designated if the spouse cannot make those decisions.
This document describes how your assets are to be distributed on your death, but it is also used to name a guardian for a minor child if both parents were to die or are incapable of caring for a child. Choosing a guardian is a critical decision and you should be sure the person you name is both capable and willing to assume that responsibility.
4. Other Issues
Be sure that the beneficiaries on your retirement plans, IRAs and life insurance policies reflect your current family situation and your wishes. You may also want to consider a living trust to simplify how assets are transferred in case of your death.
These are important issues for a young family to handle. They require thoughtful discussion and the proper legal documents. Using a qualified estate planning attorney is essential.