Having children can change a person’s ideas about the future. As such, creating an estate plan is something many people do when they become parents.
Creating an estate plan is certainly wise for new parents. However, it is also important to update and revise your plans as your children grow up. Below, we explain three especially common areas to address.
Guardianships are a critical component of any parent’s estate plan. It ensures that someone you know and trust will take care of your child if you pass away or become incapacitated.
That said, it may be necessary to change guardians as your child grows. The original guardian might move away or have children of his or her own. Or maybe your child’s needs have changed over time, and he or she now requires specific care that the original guardian may not be equipped to provide.
Consider strings attached to gifts
Parents who put specific terms or restrictions on gifts to children may need to change these as a child gets older. Kids learn more about responsibility and financial management; they develop their own goals and ideals; they go through phases, like rebelling.
As these things change for your child, you may want to add, remove or change strings attached to gifts. You might stagger trust payouts, for example, or adjust how much you leave to your child.
When they get married
If your child gets married, his or her spouse and any children the couple has can change your treatment of your child in your estate plan. There are various ways to adjust gifts, particularly if you wish to keep money or property in the family.
Some parents set up a separate trust to manage assets that they do not want to go to their child’s spouse, which can be especially valuable if your child ultimately divorces and must divide marital property. Other parents set aside money specifically for grandchildren.
Things change, and so should your estate plan
Parents know as well as anyone else that people change over time. They watch their children grow, learn, make mistakes and become their own people. Whether those changes are positive or challenging, parents can and should adjust their estate plans to ensure it continues to protect their legacy as their children grow up.