Estate planning for couples with minor is extremely important since these families have the most to lose. The focus of the estate plan for these couples should be on the care and custody of the minor children should both parents die. Below is a list of documents that should be included in the estate plan for these families with a brief explanation of each. I’ve grouped the documents into two groups; incapacity planning and legacy planning.
Note: The estate plan outlined below makes that supposition that the married couple has less than $10.9 million in assets.
A. Incapacity Planning
It is important to plan for incapacity. Advances in medicine and health care in just the last few years have made it a possible that many of us will be incapacitated at least once and maybe a handful times in our lifetimes.
1. General Power of Attorney
These documents give someone who you appoint the ability to act on your behalf concerning your financial affairs. They can either go into effect the moment they are signed which is called durable powers, or when physicians declare you incapacitated. This is known as a springing power of attorney because it “springs” into action. In Colorado a power of attorney must contain certain hot powers that have to be initialed by the principal to give your agent the authority to act in that capacity. The purpose of this power of attorney is to protect you in case you are incapacitated, and need someone to handle your financial affairs. You have the power to revoke it at anytime.
2. Health Care Power of Attorney
These documents give someone who you appoint the ability to act on your behalf, concerning your health care. They go into effect when you are declared incapacitated by physicians; therefore the powers are “springing”. They will protect you in case you are incapacitated, and need someone to manage and make medical decisions for you. It should contain a HIPAA release, so your agent will have access to your medical records. Additionally and it haw the ability to override your living will. I favor this strategy since it gives more power to your agent (thereby you), rather than the state. You have the power to revoke it at anytime.
3. Living Will
These documents give someone who you designate to discontinue artificial life support if you have a terminal condition and are in a persistent vegetative state. This is an extremely rare occurrence, and even if it does happen, your health care power of attorney will override your living will. The purpose of the living will is to give your health care agent guidance and a trail map on how to proceed at a very emotional and uncertain time. You have the power to revoke it at anytime.
4. Parental Designation of Authority
This document gives a person that you choose, power concerning the care and custody of your minor children should you be incapacitated or not able to communicate with authorities for any reason. The parental designation of authority is temporary and does not bestow guardianship on the individual, only a court has that ability. However, this document provides normalcy for children. Studies have shown that children are less impacted by traumatic experiences the sooner they can get back to school and resume a familiar routine. Additionally, this document can come in handy for something innocuous as a permission slip being signed while you are out of the country or can’t be reached due to travel.
B. Legacy Planning
Making sure the children are taken care of should both parents die, is the primary objective of estate planning for parents of minor children.
5. Will with Testamentary Trust
Typically each will devises everything to the other spouse, and should both spouses die, a trust is created for the minor children. This is known as a testamentary trust. The trust is funded with all the remaining assets of the estate, and typically with term life insurance. Currently term life insurance is rather inexpensive, and as a rule of thumb I recommend purchasing ten times the amount of an individual’s salary. Of course, your mileage will vary. A trustee is appointed by you to oversee the trust and to ensure your children’s needs are provided for. When the youngest child reaches a certain age, whatever is left in the trust is distributed to the now grown children.
6. Appointment of Guardian
This document appoints the person you choose to be your minor children’s guardian should both of you die. Although there must be an actual court appointment of a guardian, this document functions as a temporary guardianship until the court appointment. Additionally, it provides guidance to the judge as who your nominations are concerning guardianship of your children.
7. Memorandum Distributing Tangible Personal Property
A Memorandum Distributing Tangible Personal Property allows you to bequeath your personal property to your friends and loved ones. It can be amended and updated at any time. Your will should make reference to this document.
C. Other Documents
There are a couple of additional documents that you may need or desire for your estate plan.
Colorado allows the transfer of real estate through a beneficiary deed. This deed transfer’s title of your deed should you both die. It does not have an affect on your joint tenancy. It will allow you to transfer title to the trust that is created through your will. This deed allows your property to be transferred without going through probate, saving the estate time and expense.
This document gives your family and loved ones instructions concerning your memorial service and whether you would like to be cremated, buried or entombment.
Having an estate plan in place is a way that can protect your family from the unexpected or inevitable. Should you need to get started on your estate plan visit my contact page or call (303) 900-2529 to schedule a free consultation.
This article is for informational purposes only and does not constitute legal advice about your case or situation. There may be exceptions to the information outlined above. Please consult an attorney if you have specific questions about your estate or a decedent’s estate.Follow me on social media: