As mothers, we often put our children before our own needs. We can’t help it - it’s just how we are wired. But, if you’ve ever traveled on an airplane, you’re sure to hear during the safety instructions, “In the event of an emergency, and if you are traveling with a minor child, put your oxygen mask on first, then help your child”. Wow! I could spin that so many different ways, but in the context of this conversation, I’ll confine my thoughts to one way that you can show your children you love them: by planning for the inevitable. NEWS FLASH: We’re all going to pass away, we just don’t know when. Frankly, if you haven’t given this a second thought, you run the risk of leaving a set of irreparable and, potentially irreversible problems for your children. If you really knew how a lack of planning would affect your children’s lives, not factoring in the emotional loss, of course - you would definitely get your house in order.
Wealth can bring a family together and just as easily tear a family apart. As an advisor, I have witnessed the drama and trauma that occurs when an estate has to be probated, assets are unprotected and children squabble over property and legal rights. It’s not pretty and it’s not fun.
While you can’t control what happens when you are no longer in the picture, you can mitigate the bigger issues that will most certainly arise if you don’t have a plan in place. Here are five things you can do to reduce the drama and trauma:
Write Your Will: A will formalizes your wishes about how your assets will be handled after your death and how they will be distributed. If you are a single mom with minor children, it’s critically important that you indicate who will be appointed guardian of your children. If you are the custodial parent, don’t assume that their father can automatically step into the role as full-time parent, or for that matter your children’s grandparents. There will likely need to be some legal proceeding to formalize the new arrangement.
Select an Executor/Trustee: This person will handle “administering” your estate for things such as paying taxes, settling outstanding bills and distributions to your heirs. Just be sure to select someone who is financially responsible and make a point to introduce them to your Advisory team: accountant, financial planner, attorney, etc.
Consider a Trust: Trusts can help even those with smaller estates to not only protect the assets and ensure they go where you intend, but most importantly, can provide a cloak of privacy around your affairs. Also, unlike the will, which only comes into play at your death, the trust is a Living Will. It’s an all- inclusive document that incorporates your Will, Powers of Attorney for finances, health and end of life directives.
Give Away During Your Lifetime: Consider helping your children through gifting during your lifetime. Whether it’s to fund their education, helping them to start a business or to buy a house, you’ll be able to see the fruits of your gift now. Currently, you can gift up to $14000 (maximum in 2014 and 2015) per child without incurring a gift tax.
Assign a Power of Attorney: This is a person or persons that you appoint to make decisions regarding your health and financial life in the event you’re unable to make decisions. Keep in mind that you can have more than person to fill these shoes. As a matter of fact, I would strongly recommend that you select different individuals to act as power of attorney on your behalf, since these typically involve different skill sets and/or knowledge of your desires.
Needless to say, going through this process is not a pleasant one, but it’s a necessary evil. Working with a financial professional and/or an attorney will assist you in making the best decisions, help to set your mind at ease and most importantly, provide a legacy of love for your children.