Disclaimer: This transcript has not been edited for grammar, spelling, or punctuation.
What is the second-worst thing that could happen to your children, if something happened to you?
It's simply this, that you didn't plan for them. That's why in this episode, I'm going to talk about four major and very important planning considerations that every parent of minor children should be thinking about. When they're doing their estate planning and also for those of you that haven't done your planning yet. To maybe get you to be a little more motivated to get it done. This is the smart planning 101 podcast.
Aloha everyone from Honolulu, Hawaii. I'm Nicole Wipp, and I'm your host.
It's really hard to think about the unthinkable. I am a parent of a young child, so I get it like the idea that something could happen to me and my husband and, or my husband, either one of us, but especially both of us and that we would leave our child alone in this world without us just is a prospect that I personally can barely stand to think about.
So I understand when other people really struggle with this as well. But here's the thing. Every day, we as parents make decision after decision after decision about our kids, for our kids, and because of our kids. Yet, so many parents fail to make one of the most important decisions they need to make, which is what will happen to their kids. If something happens to them.
So why are you delaying estate planning? If you are delaying it. And the reason, like I just referenced is for many couples with young children. The idea that something would happen to you is just too difficult to consider. And then on top of that for a lot of people, the struggle about who really wants to have my children, if I was no longer around can be a secondary and just a major struggle.
But then a third and for many people just as big, sometimes even bigger, the reason is because of the expense. To pay an attorney feels daunting to a lot of people. And when you're trying to pay a mortgage, an estate plan may seem like a luxury that you can put off until a later time.
I want you to consider the possibility that something does happen to you and or to your spouse. What would happen to your children? And if you don't know the answer to that, and if you don't know what would happen to your money and who's going to manage it and all of that. And then on top of it, if you think, you know, but that's actually not, what's going to happen, which is in many of your cases, the things you think, you know, but you don't really have a plan. Then this is a big problem. I'm sure you can agree. Like even if you think to yourself, maybe I'm making assumptions about things that aren't true. If you can open your mind to that possibility. Then you need to then open your mind to the possibility then what am I going to do?
Because if you don't decide, who's going to take care of your children and put that decision into some type of legal documents. Usually through an estate plan. The court. The government. These are people that are strangers to your family will make that decision for you. And we can all agree that may not be the best decision for your kids.
Some parents delay estate planning because of mixed feelings about death, property issues, even marriage, and family relationships. These decisions just seem too hard to make. But ask yourself is the difficulty of thinking about this worth the pain that your child or children may go through because you didn't plan for them.
And so, I really want for those of you that have children that haven't done any type of planning to think about this, right? To think about the difficulty that you're having is going to be 10 X, that difficulty for other people or it won't be difficult for other people and they're just going to make decisions. In a way that may be completely incompatible with how you feel about who should be making decisions for your children, raising your children, et cetera, et cetera.
Okay, so along that line, then I would like for you to think a little bit more deeply about this topic because there are four main things. That when I sit down with parents of children, to talk about this topic, they don't necessarily think about these things or they haven't really thought about them in-depth, or they haven't thought about them in the way that's going to help get this planning done.
So here is the first one. One of the things that people, sometimes do is they want to name a couple, to act as the guardians of their children. So they want to say my sister and her husband are going to be my children's guardians in the event that we are gone. But, I really want you to think about whether that's actually a good idea.
Because, very few people take into consideration the possibility, that the couple may break up or that, one person might die. For example, something happens to your sister. Do you really want your brother-in-law to be the default parent of your children? In the event that your sister is gone or do you really want a situation where your sister and her husband potentially get divorced? And now they're both named as guardians, but he's out of the picture?
And so what I really usually encourage my clients to think about, and I'm encouraging you to think about is. You want to think about the person and the environment that they're going to be in, that's a big part of it, right? But think about the person first and then think about the next best person. So maybe the couple isn't the best idea. It's the main person that you want to have your child or children with.
All right, the second consideration, is that inheritances, that are not planned for very frequently, go outright to children at age 18. So if you have an IRA let's say, or a 401k for most of you, you'd be working parents at this point. So you probably have a 401k and not an IRA. But if you have a 401k, and you have your wife as the primary and your children as contingent. Well, guess what? That money is going to be held for the children. Oh, by the way, by a court named conservator, most likely, so the court's going to get involved in that. And then, they're going to get it. And they're going to have full control over that money at age 18. And I don't know about you, but I know very few 18-year-olds that can handle a large sum of money, even ones that are very responsible primarily because they never had to have to do that before so they don't have any experience with large sums of money. And so, for the most part, very few children of that age are prepared to take on that responsibility.
So you may want to consider through estate planning, how you can delay immediate payments to them, meaning that they get full control over the assets. While still allowing the use of the money on their behalf. So delaying that they get responsibility for the money, but ensuring that they can still use it. If they need to buy a car if they need to use it for college if they are getting married and they need a down payment on a house. Things like that. You may want to delay the age that they get to make that choice, but still allow for that money to be used for those types of purposes that can all be done with a proper and legal estate plan.
The third consideration is people that you might want to exclude from your children's upbringing, this is sort of an interesting thing because I personally had an experience of thinking about this. I had, a family member, with a very responsible job, a very responsible family member, very good loving person. But they were married to somebody that I did not approve of and certainly would not have wanted my son to live in that household with that person. So it didn't matter how much I loved my family member. There was no way that I personally would want my child to be living in that house because of this other person.
And yet, my family member was probably the most. You know, on paper looked like the very best candidate because they really are, in many ways, the very best candidate, but because of my strong personal feelings about this other individual that lived in the house, I just would not have wanted that to happen. So I want you to think about these things as well because you know, you want to think about like, I would talking about naming a couple to act as a guardian of your children can be a mistake. Well, also you want to be thinking about making sure you're excluding people because if this ever gets in front of a court, your children can benefit by making sure that the court understands that you definitely did not want your children to be with this particular person because of this other person being in the picture and that if anything changed, then you would have a different idea about that possibly. But while this person's in the picture, you don't want your child in that home. And you don't want that family member to be responsible for your child.
Because if that person looks good on paper, well, then that would be a court choice, right? It would make the most sense. And you need to think about things like this. Like how would a stranger, meaning the judge, look at this and what can I do as the parent that knows all these people to make sure that my child ends up in the best scenario possible. And this may include excluding and being very specific about the reasons why you are excluding particular people, especially when the issues related to that person might be hidden from public view that they you know, this might be family information that isn't something that would be well known on the person that you don't want them to be around is particularly manipulative and good at putting on a show. I mean, we all know people like that. And if you have situations like that in your family, you want to protect your child from that or your children from that. Then you need to be doing that as part of your planning.
All right, and then the fourth issue is about wills. So, most of you think, oh, I need a will, but, I have talked about this and many other episodes. So if you want to dive a little bit deeper into wills and my thoughts on wills, then listen to any episode where I talk about wills.
However, when it comes to parents of minor children. This is even more important in my view because a will is a completely public document. And this is something that people do not tend to realize. And, a will means that your family will go through probate, a will is a probate document. And so whatever you give to your children, the decisions that you make related to your children are going to be on full display to the public.
While on some level you might be like, well, who cares? But you need to realize that there are people out there that go and find out this information and then try to use it to their own ends. And this is something that I, as a mother would never want. I'm sure most of us would not want any situation that our children could be exposed to things like that. So, I just want to make sure that you are aware of this because you can plan through trust and a trust is a private document for the most part.
So, if you want to keep things private if you don't want people knowing things about your children, then this is really one of the things that you should be thinking about.
Bottom line, I know how it is. I am the mother now of a ten-year-old and thinking about my child's life without me is just. Yeah, it's unfathomable. Now I have personally had the experience of having to contemplate that because I got very sick at one point. And there was an idea that that might be my reality and my son's reality.
So I know how hard this is. I know what facing this feels like, but the thing is guys. And I think if you think about this, you really agree with me, that losing you would be the absolutely worst thing that could happen to your children, but the second-worst thing would be that you didn't plan for them.
As always, this podcast is not legal advice. It is general information meant to help you think and to do smart planning. I am a lawyer, but I'm not your lawyer.
So please take those things into consideration. And, you know, act accordingly because that's all that we all can do, right? We can only do what we can do. And we can only do our best.
So to be clear, the best thing that you can do is take this information that I've given you today, think about it. And then go get some planning done no matter how hard it is no matter how difficult it is to think about it really you want to be doing this for yourself and more importantly for your children.
Do you have a question you want answered on this podcast or an idea for the podcast? Or are you somebody that would be a perfect guest for this podcast and have a smart planning idea? I love to hear it. Visit smartplanning101.com/connect and make sure to subscribe.
Thank you for listening.
