Sending your kids off to college is a bittersweet experience. Some parents are reluctant to let their children out into the real world, constantly worrying about their health and safety. Others are eager to remodel the child's bedroom or take the couple's vacations they never could when their kids were young. No matter how you feel about your child's imminent departure, one thing is certain: you need to review your estate plan before they leave the nest.
Revising Your Estate Plan for the Next Phase of Your Lives
If you made an estate plan when your children were young, it likely contains information that's no longer relevant—such as who will raise them if you pass away. As you and your children get older, it's important to update your estate plan so that it sets up your children's futures while still allowing you to enjoy yours.
Before dropping your child off on campus, you may want to:
- Make sure they can handle their inheritances. If you were to pass away tomorrow, your child could inherit all of your accumulated wealth and property overnight. If this makes you uneasy, you may want to consider creating a trust-based estate plan that can mete out their inheritance slowly. This allows them to learn how to handle financial matters while keeping most of their holdings protected from creditors or other family members.
- Assign important roles to your children. Now that your child is an adult, you may legally designate them as executor of your will, beneficiary of your life insurance, or healthcare proxy to make decisions for you if you are incapacitated.
- Ensure you retain your parenting abilities. Once your children turn 18, you lose a lot of legal responsibility for their lives—including the right to know about their medical treatment. If your child is in an accident while away at school, you may not be admitted into the hospital room or updated on his or her condition. If you want to be able to make life-and-death decisions for your child, they will need to name you as a Health Care Proxy and complete HIPAA authorization forms as soon as possible.
- Consider their role in your business. If you want your child to play a role in your family business, you may want to update your operating agreement and succession plan to reflect these wishes. If you have more than one child, you can assign certain duties to each, establish voting rights, and determine how they will be compensated.
- Downsize. After children leave home, many couples opt to move into a smaller house to decrease their maintenance costs and monthly expenses. In addition to causing potential disappointment for children hoping to inherit the family home, it can also lead to unequal inheritances if the home formed the bulk of one child's inheritance. Our Florida estate planning team helps to avoid accidental disparities in inheritances and updates asset lists to include items of significant financial or sentimental value.
- Retitle your assets. Your child's departure could usher in a new era of financial freedom, allowing you to make new investments (such as real estate). However, every acquisition carries the possibility of being hit with taxation and fees when it goes through the probate court. We can retitle properties, bank accounts, and other holdings in the name of your trust, maximizing the value of your investments.
- Continue your legacy. There may be more you want to pass on to your children besides your personal belongings. In our legacy planning interviews, we can create a letter to your loved ones containing your beliefs, family history, important life lessons, advice, and other things you don't want to leave unsaid.
A Trusted Advisor Stays by Your Side
Life's transitions are hard enough without adding anxiety about the future. That's why the legal team at Yolofsky Law test drives each of our clients' plans, ensuring you know exactly what will happen if anything happens to you. Give us a call today to review your estate plan or download our free guide, Be a Hero to Your Family.