|Written by John D. Buerger, CFP®|
|Thursday, 10 June 2010 16:06|
I am very excited to have contributed to a recent article in the Journal of Financial Planning on the subject of this week's post. Read the Article or go to the bottom of this page to learn more.
This week's post is for people with minor children. If this is you ... read on. If this isn't you, there is likely to be someone close to you who does have minor children ... so read on and pass it on.
How safe are your children?
If something were to happen to you, would your kids be taken care of by someone you know, love and trust? Or would they be forced to be with a stranger at one of the most stressful times in their young lives?
I almost hate to bring up this topic - it is quite the turnoff for most folks (even though it shouldn't be), but this is important especially if you have minor children.
The topic is an Estate Plan.
Who Should Have an Estate Plan
I know estate plans must be a turn-off because so few American families have one. Less than half of Americans have even a basic Will - which means that more than half the time when a person dies in this country, their wealth is distributed by a state-mandated formula, not by the wishes of the deceased person.
But an Estate Plan has a lot more to it than just the Will. There often should be a Living Trust to avoid (expensive and time consuming) probate. Medical Directives can avoid situations like the Terri Shivo case and there are other important documents as well.
There are very few people in this country who have a complete Estate Plan (less than 20% of Americans) even though a vast majority should.
Who should have a professionally drafted (by a lawyer) estate plan?
--- Anyone who owns a home - regardless of whether or not they have equity in that home.
A Tragic Story
For the purposes of this week's blog ... we're going to focus on just one important element - child guardian issues. This is to address the simple case of "what happens to your young children if you are in a tragic accident?"
Imagine for a moment this scenario: Your spouse is out of town on business and cannot be reached by phone. Your kids are home with the baby sitter and you're out (at work, running errands, etc.). You are in an accident and don't show up at home when the sitter is expecting you. The sitter gets worried and calls the police who come to your home.
What happens next?
Odds are, the sitter is sent home and your children are taken away from your house and put into protective custody with Child Protection Services while your spouse or some other responsible party can be located.
Is that what you want to happen?
The Estate Planning document that solves the question of "who takes care of my children if I die" is the Guardianship clause of your Last Will and Testament. Those who don't have a will are expecting the state rules regarding child guardians to be the same as their wishes. If you have a former spouse or unstable relative, that is likely not to be the case.
But even the Guardianship clause of your Last Will and Testament does nothing to address the Tragic Story above. For one, the babysitter probably doesn't know that you even have a Will, much less where it is or what it says. Secondly, once the call to the Police has been made, the trip by your children to Child Protective Services is almost completely assured.
Short Term Guardianship
The best solution is to have a Short Term Guardian declaration written up.
This is a one page letter outlining to all concerned that if you and/or your spouse cannot be reached, a short term guardian has complete authority to come in and take care of your children. This person should live nearby and complete contact information (phone, email, etc.) should be on the document (as well as your own contact information).
Make certain that ANYBODY who is taking care of your children when you are not around (schools, baby sitters or even friends) knows that this paper exists and where to find a copy. Tell them to contact this short-term guardian FIRST, before calling the police or any other official. Put a copy on your refrigerator, in your wallet and in any backpacks or other bags that your minor children might have with them.
This one simple step can save tremendous stress with your children at a time that is likely to be traumatic for them anyway.
A Great Resource
My good friend, Sean Mason, is an Estate Planning Attorney in Santa Barbara. He has put together a Child Guardian Pack with all the documents you need to cover both short term and long term guardianship issues. While he normally charges a few hundred dollars for these documents, he is making them available for free. Simply go to his website at http://www.masonlawgroup.com/child-guardian-pack
If you are one of the more than 50% of Americans who does not have a will or 80% of Americans who does not have a Living Trust and complete Estate Plan, I encourage you to contact an attorney and get the ball rolling on this.
It is one of the most challenging aspects of planning for your future ... but it will give you a tremendous amount of peace of mind once it is done. You are welcome to contact me if you have any questions or need help getting started. I've seen both sides: folks who had an estate plan in place when something happened, and horror stories of those who didn't and all that happened which was not intended.
John Buerger is a financial planner in San Luis Obispo, California and recently contributed to an article in the Journal of Financial Planning on Estate Planning for Middle Income Clients. Read the article at http://www.FPAnet.org/journal/CurrentIssue/TableofContents/BettingtheFarmEstatePlanningforMiddleIncomeClients/
Linked with permission by the Financial Planning Association, Journal of Financial Planning, Volume 23, Number 4, April - 2010: Betting the Farm - Estate Planning for Middle Income Clients by Shelley Lee
|Last Updated on Thursday, 07 October 2010 21:32|