Estate planning involves preparing tasks to preserve, manage, or distribute a person’s assets in case of incapacity or death. It includes wills, trusts, donations, executors, and beneficiaries. Most people think that only rich people should make the plan, but everyone should have one.
Aside from adults, kids should also learn about this valuable legal process. But since it often involves complicated terms and procedures, most parents refrain from educating their children about it. Unfortunately, not having a plan can bring them into challenging family disputes. Hence, parents should consider planning their estate for their children.
1. Show Them Your Estate Plan
Parents should set an example for their children. Before you can educate your kids about preserving and managing assets, it is best to run them through your plan. It allows them to have an idea of the necessary documents. Moreover, it will enable them to know the seemingly complex legal process.
You can introduce your children to the concept of a personal representative who is appointed to manage an estate when the decedent dies. Under the estate planning law, they can also decide regarding financial and health matters. Some parents assign their kids as representatives.
But if you choose another person to be your executor, your kids should know their name and contact information. They will turn to your representative once an unfortunate event happens, so they must know about your will. It would help if you also informed them where you keep your documents.
2. Have a Fun and Simple Conversation About Your Estate Plan
It would help to discuss the relevant concepts appropriately for their age. You can teach kids about complex topics by giving real-life examples. For instance, you can tell a story about a woman with several cars and houses and how she can distribute her properties. You have already simplified the concept of assets and their distribution.
In addition, you can encourage them to participate in a mock will-making activity. This task allows them to learn more about the estate planning checklist.
Make an inventory of the assets.
Examples of assets include pieces of jewelry, vehicles, and houses. Also, mention savings accounts as an introduction to intangible assets.
Write a mock will and testament.
Let them pick a personal representative who will manage the listed assets. During this time, you can also introduce the term beneficiaries or those who receive the properties of the person who made the will.
List sample taxes and debts.
You can explain that they must pay a certain amount. If they don’t pay, the beneficiaries can’t receive the properties.
There are several other steps in making an estate plan, but they may be overwhelming for children. Hence, it’s essential to consider their age when introducing the process.
3. Explain the Importance of Planning
Your kids will likely listen to the topic if they recognize its importance. After defining and giving examples regarding the concepts, you must emphasize the benefits of preparing documents for asset management and distribution.
It can ensure they have a suitable guardian.
They can have a guardian who shares the same values as their parents. In addition, estate planning documents can help you choose someone with the same parenting style as you.
It can prevent them from being involved in family conflicts.
You may have heard of disputes regarding a decedent’s assets wherein one family member asserts that they must receive more or they must handle the finances. These problems can negatively affect your children, so it’s crucial to state your asset’s distribution explicitly.
It can reduce the amount of tax the estate or beneficiaries might have to pay.
An estate planning attorney can devise a legal strategy to lessen your tax burden. As a result, your children can receive more assets for their savings and expenses.
4. Inform Them About Common Mistakes
Teaching your children about the basic concepts and processes isn’t enough. You should also educate them about the common mistakes to avoid.
Not updating the plan can create adverse effects
Such as a child not getting an inheritance. Hence, you should update the involved documents in cases of divorce, birth, and remarriage.
Estate planning for families with children doesn’t end with having a will.
Although it provides instructions on guardianship and distribution of assets, it doesn’t constitute your entire plan. Your plan can also include a trust for your children to have financial security.
Choosing the wrong personal representative can impact succeeding legal processes.
You should only select an executor willing to discuss the matter with you. It would also be best to choose someone with the time for estate settlement since it can be a year-long process. Most importantly, you should designate someone who agrees with your wishes and gets along with your family.
5. Teach Them About Financial Literacy
Estate planning and trusts for children are mainly related to finances. They can ensure your kids’ financial security. Hence, it would help if you educate them on the basics of financial literacy.
Encourage them to earn their allowance.
You can assign simple household chores, which can be the basis of their weekly budget. It can teach them the importance of working for their own money.
Open a bank account for them and teach them about it using simple words.
This estate planning for minor children strategy can help them recognize the importance of building their funds.
Ask your children about their goals and motivate them to save money.
You can also offer to pay half the cost.
Take your kids to the grocery store and instruct them to prepare a list.
It can help them prevent overspending and teach them about organizing their funds.
Hire an Estate Planning Lawyer
It may be difficult to accept the concept of mortality, but it can help you prepare for your kids’ future. Having a plan regarding your estate can ensure your children have a suitable guardian. Moreover, it can prevent them from being involved in messy family disputes.
Protect your kids by consulting a lawyer regarding estate planning and guardianship. Contact our law office to schedule a consultation with Cristy J. Carbon-Gaul, an experienced attorney in these fields of law.