Question: What are the key considerations for new parents when establishing their estate plan? Are there any potential pitfalls or common mistakes that new parents should be cautious of when establishing their estate plan?

Answer: New parents should consider:

• Who will raise their children in the event both parents pass while a child is still a minor
• If there are stepchildren, will they be treated as if they are the biological children of both parents, or will each parent be responsible for making gifts to their own biological child?
• If you are stuck on who should be the guardian of your children, know that you can have a financial guardian, meaning the person who will manage the money you leave for your child, and a personal guardian, meaning the person who’s going to raise your child. Some parents find it easier to split those responsibilities.

Pitfall 1: Naming minor children the beneficiaries of accounts such as retirement accounts, investment accounts, or life insurance.

Pitiful 2: Only one parent having an estate plan.”

Question: Could you outline the essential documents that new parents should include in their estate plan, such as wills, trusts, and guardianship provisions?

Answer: The basic documents that all new parents should have would be a

• Will
• Power of attorney
• Health care proxy

These documents care for you while you’re alive and after you’ve passed away. Trusts, and other estate planning documents, can be layered on top of these three basics. Inside the Will is where we outline the guardianship provisions.

Question: What factors should new parents consider when selecting a guardian for their children, and how can they ensure the chosen guardian is legally recognized and capable of fulfilling the role?

Answer: Factors to consider: relationship with child, proximity to child, their willingness/desire to be a guardian, temperament, existing household structure, shared religious/political/community values.

Naming a guardian in your Will does not automatically make that person the guardian. It gives them the authority to petition the court and request to be formally recognized. Once they complete that court process, then they will be formally recognized.

“Capability” is subjective. It’s a matter of whether or not you feel this person will care for your child in the same way that you would. Are they responsible? Will they welcome the child into a family that already has children and not treat them differently? A positive answer to those questions means you’re likely dealing with someone who’s capable.

Question: Can you explain the importance of periodically reviewing and updating an estate plan, especially for new parents as their circumstances may change?

Answer: Estate planning documents should be considered living breathing documents. Just like we check the oil in our vehicles, or visit our doctors once or twice per year, documents should be revisited. If you have passed away and the outdated document mentions persons who have passed away or gives responsibilities to persons who are no longer responsible, the challenge to edit/pivot is great.

Question: Can you provide guidance on involving children in the estate planning process and educating them about their future financial responsibilities and inheritance?

Answer: Excellent question. The biggest issue with estate planning is parents feel they need to do it in secret. This is especially problematic when the terms of their plan seem counter to the children’s expectations. Example: Jaime always thought that she would receive the family house because she helps her mom take care of it, but mom has left it to her son Jorge instead. Jaime is more likely to have concerns/issues with the Will because she’s going to have a hard time believing it was her mother‘s actual wish.

I suggest parents let their children know that they’ve created an estate plan, the name and location of the attorney, who helped them create the plan, the location of the document, and the bigger ticket items that they intend to transfer to their child. That way, there’s less shock upon reviewing the Will.

Financial education is especially important if the gift involves ongoing maintenance, such as a home, land, or investment property. It’s often not enough to simply leave the property, parents should be prepared to leave financial resources to care for the property. Which means there needs to be a discussion on how the financial resources will be managed. If it’s believed that the children are incapable of doing that, then the next best option is to have the money managed by a third-party.

– Lillie N. Nkenchor

All written content is for information purposes only. Opinions expressed herein are solely those of Zenith, unless otherwise specifically cited. Material presented is believed to be from reliable sources and no representations are made by our firm as to another parties’ informational accuracy or completeness. All information or ideas provided should be discussed in detail with an advisor, accountant or legal counsel prior to implementation.