Most parents in Illinois know how vital it is to appoint guardians for their children should they die. It is something you do early in parenthood, almost as a matter of course. But do not stop there, parents. Planning your estate is also important, and for the same reasons. It takes care of your children--and your property--after you are gone. Even if you do not have a big house, huge savings account or hefty investments, an estate plan is a valuable legacy in and of itself.
Investopedia notes four essential reasons moms and dads should develop an estate plan for their children, beginning with your investments. You likely have or will have a 401(k) or an IRA, as well as a home at some point in your life. These are assets that typically increase in value, and without an estate plan, you will not have a say in who receives these assets. Courts often decide who gets what when there is no plan, and it can cause fighting and take several years.
Things can get heated when siblings do not agree about who should have a specific possession. Or perhaps a daughter may feel she deserves a more significant portion because she was a caregiver for a parent. The point is, it is better to make the decisions yourself, since it is your property, and only you have the insight about which child handles money better and which one asked to have your mother's engagement ring and other issues.
Estate planning is essential to ensure your property is protected from the IRS, which can take quite a big bite out of your assets otherwise. State and federal estate taxes and state inheritance taxes can be burdensome unless your plan takes advantage of ways to reduce the amount of income taxes that children will have to pay.
Finally, part of estate planning includes making a will. If you haven't already assigned guardians for young children, you should name them in a will to ensure they are raised by the people you want to raise them if both parents should die before they turn 18. Otherwise, the courts will make that decision for you.
How to divide your assets and protect your children are important considerations for all parents. To retain control of such decisions and relieve the sting of heavy taxes, creating an estate plan is a must.
This article features general information and should not be considered legal advice.