I recently finished a great book by a fellow WealthCounsel member, Laura K. Meier, called "Good Parents Worry, Great Parent's Plan - Wills, Trusts, and Estate Planning for Parents of Young Children." It's on Amazon, and I encourage you to pick up a copy. Laura owns an Estate Planning practice in California with her husband which focuses upon the special Estate Planning needs of young families with kids, and her book raises some terrific ideas that young families need to think about, that older folks don't.
I actually wanted to entitle this series of blog posts "Is your Estate Plan Ready For the Zombie Apocalypse" because with me "Zombie Apocalypse" is a euphemism for whatever happens to be the worst case scenario. Even thinking about something happening to my wife and myself at the same time, leaving my eleven year old son alone is .... well, it's the equivalent of the Zombie Apocalypse! Just the other day, I saw my son cutting up some cheese for a snack, but he was making a crumbled, mangled mess of it. I showed him how to cut some nice, thin non-mangled slices, and then asked him "Now, just in case something were to happen to Mom and me, and you were stuck in the Zombie Apocalypse with nothing but a hunk of cheese and a knife, do you think you could cut cheese properly?" Although his cheese slicing skills leave much to be desired, my son is no dummy and he replied "Dad, if I was stuck alone in the Zombie Apocalypse, I would probably just bite hunks out of the cheese so I have more time to fight off Zombies." OK, he had a point. But I think so do I. You need to plan for the worst case scenarios. Although it is not likely to happen, the worst case scenario if you have kids is - what happens to your kids if something happens to you?
Most young families simply don't have a plan at all. Right or wrong, most people don't plan their estate until they are older. When a young family wisely decides to plan ahead and put together an estate plan to protect their children, often what they end up with is an "Old Person's Plan", with some provisions slapped on to address kids, like a guardianship provision in their will. I tell clients that a young family's estate plan must be entirely different, because their plan must begin and end with protecting their kids, not just protecting their assets.
I'm writing a series of blogs on this important topic, partly because I still fit in the category of a "Young Family" (don't pay attention to the gray hair in my photo, my wife says she is too young to be married to a person with that much gray hair anyway), and most of my friends and acquaintances are in that "Young Family" category as well. But I will begin with the same question that Laura Meier asked, which is "What happens today?" If you and your spouse don't come home from date night, what happens that night? Tomorrow? Next week?" The answers to these questions must be ... have to be ... are required ... to be different for Young Families than for older folks. An IRA, or investment property, a boat, jewelry, or antiques can sit quietly by for a few months or more while a Probate Court figures out what to do with them. If something happens to you and your spouse tonight, your kids will wake up tomorrow and deal with the fact that they are now alone. They need to be taken care of immediately. That day. A guardianship provision in a will just doesn't address that, because someone needs to hire the probate lawyer, who will have to look for and locate the Will, file it with the Probate Court, draft and file the petition for appointment of the guardian for minors, notify members of the family, schedule the hearing on the Probate Court's often busy docket, appear at the hearing and get the Court's signature on the Order appointing your choice for guardian for your kids. That will take weeks at best, maybe longer. The question we are trying to answer is: What happens today?
So let's begin at the beginning. You may be surprised to learn that 100% of you living in my home State of Florida, already have a plan in place for your kids. It's not your plan. It's the State's plan. And if you don't plan ahead for your kids, the State will step in with its plan. Here is how Florida State's plan works. It's called Foster Care. Don't get me wrong. Families who offer their homes to foster kids are generally wonderful people, and the stories you have heard about foster parents "doing it for the money" are mostly hogwash. My family was a Foster Care Family. But foster families are the first people to tell you that what is best for kids is to be with their "real" families, or at least people they know, and trust, and love, who will make sure they continue to go to the school they know, and play with the kids they know, maybe even sleep in their own beds, in their own rooms, and keep everything stable, as much as possible. Foster Families can do a lot, but they can't do any of that. Remember, these kids have just lost so much, so it's incredibly important to provide as much security, stability and "sameness" for your kids as possible. That's your job, not the Foster Family's job.
Next is money. It always comes to that. Even if you have some assets, if you have not made any special provision for how it should be used to support your kids, the State will appoint a guardian over the property to administer it until your kids turn 18. When they turn 18, they get the money. Lump sum. I know what you are thinking; what is an 18 year old who lost their parents during their childhood likely to do with a financial inheritance? Well, it probably doesn't have anything to do with "diversification of stock and bond portfolios." Realistically, they will likely blow it on a fast car and such.
I can't fit everything into one Blog post, but the important thing for you to know right now, is that there is an answer. It takes advice and planning, but it can protect your kids, provide for their welfare, and keep them from spending even one day in Foster Care. Whereever you found this Blog, "like" it, "subscribe" to it, or if you are finding this weeks or months later, just read on ahead, and we will go through this step by step.