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Why All New Parents Need a Will
Get CE Credits with John Lewandowski
August 29, 2019
Frequently Asked Questions About Estate Planning
September 19, 2019
If you’re reading this, it most likely means you are a parent — congratulations! It also means you may be concerned about what will happen to your child(ren) should you unexpectedly pass away. We have outlined the top 4 Reasons why wills for new parents are critical!
Despite wills being around for centuries, approximately 57% of Americans neglect having a will. Dying without a will is putting your family, your possessions, and your last wishes in the hands of the courts and out of your control. Having a last will and testament legally protects your spouse, your children, and your assets. Additionally, it ensures that a court is not deciding your affairs for you.
1. What happens to the child if both parents die without a will?
There is no question about it. If you have kids, you need to have a will.
If you have a spouse, your possessions are most likely going to them. But if you both die without a will, your children are usually next. This means that if you want your kids to inherit after your spouse, then you need to put that in writing. This is to ensure there is no room for error or interpretation by the courts. On the contrary, if you don’t want your kids to inherit, then that needs to be in writing.
Whether you want your kids to inherit your assets or not, it is likely that you have feelings about it one way or another. For this reason, it’s very important that you have a will in place so that the decision is being made by you, not the state.
You can (and should) change your will over time. For example, if you have two kids, create a will, then ten years later, have another kid, you will need to update your will to include your third child.
What happens to the kid(s) is the most pressing question.
The most asked question to why a will is important if you have kids is because you name a guardian of your children. The guardian is responsible for raising your children. Who you name as guardian is critically important to how your children inherit and how they are raised.
Deciding on a guardian can be an emotional conversation. While you don’t need the guardian’s permission or approval to name them in the documents, it’s a smart idea to ask them. Also, important, let relatives know if they’re not being named guardian, especially if they expect to be. For example, say you want your sister to be named guardian of your children because she has similarly aged kids and lives nearby. If you feel your parents would be hurt by this decision, letting them know now can ease the pain if the worst were to happen.
2. What happens if I die without a will?
Emotions typically run high when a person dies. Unfortunately, death does not always bring out the best in people. These reactions are even more heightened when the deceased does not have a will in place.
Do you own a home? A car? A valuable coin collection? No matter how minor, naming beneficiaries for assets can eliminate pain, confusion and grief. If you’re married, it may make sense to leave everything to your spouse if you were to die, and your spouse to do the same for you. However, it is wise to name someone else as well, in the event that you were both to die.
If both parents pass away and leave behind a child, or children, without a will, the probate court will appoint guardianship to whom they decide has the best interest of the child. While ideally the child, or children, would live with someone they know well, in some instances, that is not the case.
Death without a will can be emotional and troublesome for the loved ones left behind. Not having a will in place can complicate things even further. Feuding families, family heirlooms, and many other scenarios can mostly be avoided by having a will in place.
3. How will I know my child is taken care of after I die?
Ensuring your child is taken care of after you pass is usually on the forefront of every parent’s mind. The best thing you can do is to plan for the unexpected and create a will. Having a final will and testament in place will help with decisions of how you wanted your child raised.
One of the most important things you can do in a will to ensure your child is taken care of is to name your spouse as the sole beneficiary. This ensures that your assets aren’t divided how the court sees fit, but how you and your spouse intend. Additionally, you should name a trustee to manage the assets (this can also be your spouse), to ensure everything is dispersed how you intended.
Another important thing to note, you can setup a trust with specifics on when and how certain assets are available.
4. Will taxes take all of my child’s inheritance?
Since 2017, the lifetime gift tax exemption is $5.49 million per individual – the same as the federal estate tax exemption. That means you can leave up to $5.49 million to your children without worrying about estate taxes. As such, couples can together leave up to $10.98 million.
Keep in mind that life insurance policies, pension benefits, and real estate all count toward your total assets.
If you know or suspect that your estate will be worth more than the exemption amount, discuss this with an estate attorney about how to minimize the tax burden on your children.
Having a will in place is affordable, easily attainable, and will give you peace of mind. Should you have any additional questions on why you need a will, and especially wills for new parents, please contact us today for a free consultation!
