4 Things every parent needs to protect their kids’ future.
This article was originally published in the Portsmouth Herald 7/17/15.
After my first child was born, I did the responsible thing and purchased a life insurance policy for myself. I’m a great parent! Yay! Done and done, right?
Almost. Just a couple more things that every parent needs to protect their family. Not that we ever want to think about the “if”, but it’s even worse to think about the “after” if we haven’t determined, legally, exactly what should happen next.
#1 Life Insurance: For most folks under 50, it’s fairly inexpensive to get a life insurance policy and the younger you are when you buy it, the cheaper it will be. Monthly premiums can be anywhere from $25 to $150 based on terms and value. To start, determine how much life insurance you’ll need by taking into account current/future debts (you can find an insurance calculator online at lifehappens.org). You should also purchase life insurance for both parents, even if one of those parents stays at home with the kids—the caretaking costs for the children and household are enormous expenses to maintain. Do your research on the internet and contact a qualified life insurance rep to help you obtain a policy that’s right for your family.
#2 Will: People tend to assume that you only need a will if you own property or have a large amount of financial assets. Not true. A will is the only legally recognized document that outlines not only the distribution of your property, but can name the person in charge (spouse or other parent) of distributing finances for your children’s care. Without a will, many states will distribute only one third of the assets to your spouse and assign a state-appointed administrator (that you pay for) to manage your children’s funds until they are 18. Nobody wants that.
Note of caution: The beneficiaries you’ve assigned to your 401K, IRAs and life insurance policies can trump the designees of your will. Be sure to periodically check those forms to ensure they align with the details of your will.
#3 Guardianship Designations: In the event that both parents passed away simultaneously, naming an individual(s) to care for your children until they become legal adults is something you need to articulate in a legal document (your will). Without it, there’s no guarantee with whom or where your children may end up.
#4 Living Will: I’ve been asked many times by a doctor if I have one of these, and I’ve always said no, not fully understanding what a Living Will even means. A Living Will, also known as an Advance Directive, is the statement of your personal wishes for end-of-life care. For instance, if you ended up on life support, your wishes to be removed from that care and end medical expense to sustain that care would be outlined, thus eliminating the burden of such a decision onto other members of your family.
To execute these documents, there are many online services you can use like LegalZoom, et al. I compare these to doing your taxes online. Easy enough, but you’re not able to get the face-to-face professional advice about write-offs, discounts and other benefits you could be receiving. Similarly, a will is not something you want to pump in a few details and have a computer spit out your children’s future.
It’s important stuff. Your family is worth it.
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