Four Facts of Life and Death

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    It’s January, and if you’re anything like me, you’re hitting the gym instead of the holiday party circuit (that was so December). And, you’re contemplating making a New Year’s resolution or two, which means it’s time to reassess self, finances, and life goals – a time to take stock.

    Chances are, you could stand to re-examine ways to provide for your children in the event of your death.Although most people intend to take care of these details, they usually get about as far as I do in my annual New Year’s resolution to run a marathon (I… a-hem… walked 2.1 miles on a treadmill last October). As a wills and trusts attorney, even I hate thinking about the possibility of not being there for my little girl, but regardless, there are some facts of life (and death) that parents should know.

    1. If you don’t choose guardians for your children, the court will.

    Just think about that for a second.If you don’t arrange for someone to have custody of your children in the event that you are no longer around to do so, someone else will choose who gets to raise your children. Now, don’t get me wrong. It’s not like the court system would randomly choose some “JoeShmoe” to serve as your child’s guardian. The likely candidates include family and very close friends. But still!This completely freaks me out, especially since there are certain unnamed family members whom I would really, really, really (you get the picture) do not want raising my little angel.

    When choosing a guardian, keep in mind that hurt feelings matter little when compared to the emotional and physical well-being of your children. Most people Think they should choose family members as back-up guardians, but my experience as an attorney shows that about half of people choose close friends instead.

    Factors to consider include: Faith and worldview – think about your religious beliefs and morals, because you may want to choose guardians who hold similar values. Is faith a part of your daily life? Are you an avid environmentalist?Parenting style – if you feel strongly about a certain parenting approach, talk to potential guardians about it to make sure that they would be able to carry out your wishes. Location – you may want to choose guardians who live in your immediate area to allow children to continue attending the same school, and socializing with the same friends.

    Choose based on what best reflects your values and wishes for your children, and be sure to discuss your intentions with the chosen guardians to make sure they are on board.

    2. Life insurance is the best way to provide for children if you aren’t very wealthy.

    If you do not have significant savings, consider purchasing a life insurance policy to protect your young ones in the event that you are no longer around to do so.If you are in relatively good health, term life insurance can be very inexpensive and can provide significant peace of mind.

    For example, my husband and I pay roughly fifty dollars a month for one Million dollars of combined coverage. Since we know that our daughter is going to be the first female President of the United States, we wanted to provide enough money for her guardians to send her to an Ivy League school. I’m just say in!

    But seriously, consider how old your children are, any savings you already have, and how much it would realistically cost a guardian to raise them to independence.If you purchase life insurance in that amount, any possible guardians will not be financially burdened, which may even open the door to new considerations for your choice of guardians.

    3. If a child inherits money in Virginia, a court-appointed custodian will manage the money AND get paid out of the inheritance.

    Yep, that’s right. If someone under the age of 18 inherits money, a custodian (think money manager) will be appointed by the courts, and the inheritance will be paying that custodian’s salary.

    Astoundingly, my life insurance agent Told me that our one million dollars of insurance would deplete at an average rate of four percent a year, which translates to $40,000 for the first year alone going to the court-appointed custodian rather than to my child. Yikes!

    The good news is that you can prevent this kind of depletion by creating something called a testamentary trust. I know, I know, it sounds complicated, but a testamentary trust can be as simple as two or three paragraphs in your will. You just need to choose someone reliable to be the person who actually distributes the money to your children, called a trustee.Then, your life insurance money and any other funds you choose, can pour into the trust and ensure that your children get the money you set aside for them.

    4. Do-it-yourself websites, software and books are no substitute for the advice of a trained attorney.

    I am fully aware that most people do not relish the thought of hiring a lawyer (hey, the thought makes me pale and I am one). But this is one of the times when Having the help of a professional will really pay off. Realistically, you should be able to have a will drawn up with a guardianship – and even that fancy testamentary trust – for under a thousand dollars for you and your co-parent. You should very easily save more than that, especially considering the money you will have avoided giving a court appointed custodian.

    Of course, the best benefit of making sure your child’s future is well prepared for is peace of mind. Plus, if you’re anything like me, you’ll enjoy being able to check one more thing off your to-do list. Now, go out there and get on that treadmill with all the rest of us New Year’s resolutionists. Maybe we’ll even see each other at the Richmond marathon this year.