Americans tend to drag their feet when it comes to estate planning. Only 36% of adults have a will, and the numbers are even lower for young adults. For example, among adults aged 35 to 44 — an age when many people have accumulated substantial assets — only 20% have a will to help ensure that their assets are distributed according to their wishes.1
Protecting material assets is important, but protecting your children — your most precious asset of all — is even more important. Yet only 49% of married parents and 17% of single parents have a will.2 People cite various reasons for not creating a will: procrastination, a lack of urgency, or because they don’t think they need one.3 If you have minor children, however, you need a will regardless of any material assets you may possess.
Naming a Guardian
A will is generally the simplest and most appropriate way to select a guardian for minor-age children and adult children with special needs. If you do not select a guardian, a probate court will select one for you, and your child’s financial matters might be managed through the court. A legal guardian can provide daily care as well as financial oversight, but you may name a different person as custodian for specific accounts.
It’s usually not a good idea to name a minor child as the primary beneficiary of a retirement account, pension plan, or insurance policy, but it may be appropriate to name children as contingent beneficiaries as long as you also specify a guardian or custodian. Beneficiary designations on such accounts typically supercede instructions in a will, so be sure that the guardian/custodian you name on the beneficiary form corresponds with your will unless you want the account assets controlled by a different individual.
Creating a will does not have to be expensive or complex, but it could make a big difference for your children and other heirs. If you already have a will, you should review it regularly to make sure it reflects your current wishes.
1–3) Rocket Lawyer, 2014
The information in this article is not intended as tax or legal advice, and it may not be relied on for the purpose of avoiding any federal tax penalties. You are encouraged to seek tax or legal advice from an independent professional advisor. The content is derived from sources believed to be accurate. Neither the information presented nor any opinion expressed constitutes a solicitation for the purchase or sale of any security. This material was written and prepared by Emerald. Copyright 2015 Emerald Connect, LLC.