The last thing families with young children want to think about is estate planning. However, if there were ever a time that estate planning was important, it is right after a family has their first child.
For example, let’s assume Jon and Jane have their first child, Junior. Before Junior was born, if Jon or Jane died without a will, a document that controls property after a person passes away, the surviving spouse would get all the property. This is the expected and probably favorable result. However, after Junior was born, if one of the spouses passed away without a will, the deceased spouse’s solely-owned property would generally be split between the surviving spouse and the surviving child. Thus, without a will, Jane and Junior, a newborn, would share the property equally. Initially this doesn’t seem to be a problem. However, for instance, if Jane wants to sell the home which had been in Jon’s name, a guardian would need to be appointed for Junior. This process could end up potentially costing thousands of dollars.
Most importantly, young parents should be aware of the guardian-nominating provision. If both parents were to unexpectedly pass away, the guardian nominated will be given preference over other people. Thus, the time and cost it takes to get a guardian appointed would be shortened and lessened.
Proper estate planning includes not only a will, but also powers of attorney and living wills.
A power of attorney is a document that appoints another person (called the “agent”) to make decisions for an individual (called the “principal”). A living will gives general directions to treating physicians with respect to death delaying treatment. Most think that powers of attorney and living wills are only needed by the elderly. However, there are countless situations where if young families had a power of attorney, their situation would have been easier. For example, one need not look much past the Terri Schiavo situation several months ago to see how a power of attorney or living will would have made her situation easier. When a spouse acts as the agent, the entire process is simplified in that the well spouse need not be appointed guardian.
In Illinois, there are two types of powers of attorney—property and health care. The definitions are obvious, one gives an agent the power to make decisions for the principal regarding property and finances. The other gives an agent the power to make health care decisions.
Careful attention and consideration should be paid when determining who the agent should be. Of course, many young families choose their spouse. However, as time goes on, the documents can always be redrafted to appoint a child.
Estate planning is sometimes called “preventative planning.” Getting everything in order now can spare thousands of dollars in court costs and attorneys’ fees.
Author: Brian F. Johnson (bjohnson@peorialawyers.com)
