Why Estate Planning Is Critical for Modern FamiliesBy Katherine M. Dean, CFP® | October 24, 2019
Today’s American families reflect the changing times we live in, and that’s a good thing. The truth is that families come in all shapes and sizes. Some parents belong to the LGBTQ community, others are unmarried or on their second or third marriages; some don’t have children at all. In other words, family is what you make it.
No matter what your family looks like, estate planning is critical to providing long-term stability and well-being. It involves more than just buttoning up your finances and assets—it’s about making sure your family and loved ones are taken care of after you’re gone. Without taking the time to sketch out the right plan, your estate may end up in probate court; often leading to a lengthy process for surviving family members. What’s worse, the fate of your assets will be out of your control.
This scenario is often even more complex for nontraditional families. Modern families are up against some unique challenges, but partnering with an expert and creating an estate plan that feels right to you can make all the difference.
Update Your Will and Beneficiaries
People grow and evolve over time, so it only makes sense that the will you drafted 10 years ago probably isn’t reflective of who you are today. An effective will is one that’s aligned with your values and distributes your assets in a way that honors your intentions. This includes property, personal assets, business assets and more.
If, for example, you’ve married into a blended family, bringing your stepchildren into your will may be something that feels right to you, especially if they’re minors. The same goes for adopted children, but the matter will go to probate court if you haven’t appointed someone to be their legal guardian. No matter what, choosing an executor you can trust is critical. Look to someone who’ll be fair and who’ll carry out your wishes the way you would have wanted.
Consider your beneficiaries, as well. Whether we’re talking about retirement accounts or a life insurance policy, it’s easy to forget to update beneficiaries following a divorce or new relationship.
If you have, for instance, a Roth IRA without a beneficiary, it’ll be lumped in with your estate upon your death, which may not be what you want. This is assuming you have a will. Without a will, the state will decide what happens next—which could be a financial nightmare for your family.
Appoint Appropriate Powers of Attorneys
There are two terms you need to know: health care power of attorney and durable financial power of attorney. Both are designed to help you should you become incapacitated or unable to make decisions on your own. It probably isn’t something you want to think about, but let’s say you develop dementia at some point down the road. Who do you trust to make your health care decisions for you? Similarly, who would you designate to handle your financial matters?
Having these things authorized in writing is especially important for unmarried couples who’ll otherwise have no legal rights in these matters.
Make a Plan for Your Children
The first thing that comes to mind here may be custody for minor children—and that’s certainly important—but modern families are wise to look closer at their specific needs. For instance, you may want special family heirlooms to go to your adult children from your first marriage, while your stepchildren inherit other assets.
Again, it all boils down to what your family looks like and what your needs are. For example, if you and your partner have used reproductive technology to freeze your embryos, will they be able to use them after your death to conceive a child? These are details that need to be addressed before the time comes.
Work with an Advisor Who Gets You
The importance of this last bit can’t be overstated. When partnering with a financial advisor to create your estate plan, you want someone who has experience working with nontraditional families. Opal Wealth Advisors embodies this mission and cares about your family’s financial security. We’ve worked with families of all stripes and understand the many nuances of crafting an estate plan that matches the unique needs of each individual family—no matter what that looks like.
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