My wife and I finalized our will and estate plan last week, which included naming a guardian for our child and setting aside some money for the guardians to take care of her if we were to pass on. This was the first estate plan we have created together and it was a learning experience for us. Less than a week after signing the paperwork, we realized there were a few things we would have done differently, mostly regarding how much we should leave for the care of our children.
The importance of naming guardians for your children
Until last week, our estate plan was sorely lacking. I didn’t have a will, so my estate would transfer by law, which would be to my wife, then daughter, then other heirs (father would be next in line). My wife had a will that was several years old and predated our daughter. So we felt it important to create a new will that would not only specify that our assets would go to the surviving spouse, then to our daughter, but to also name a legal guardian for her. The last thing we wanted was to have something happen to us and have the rest of our families scrambling to determine who would take care of our little girl. It saves heartache, time, and legal bills for everyone involved.
Choosing the guardians. Choosing the legal guardian for your children is a personal matter, and one I won’t delve into in this article. But please put a lot of thought into it before deciding on someone to raise your children in the event you die. You will want to choose someone you trust implicitly and someone that has similar values (religion, ethics, eduction, money, etc.). You will then need to sit down and talk with them about it, ask and answer questions, etc.
Providing for your children after you die
If my wife and I were to both die before our daughter, she would receive the balance of our estate. But that would go into a trust that she wouldn’t be able to touch until she turned 21 or received special permission from a court to use the funds (college tuition, for example). But you shouldn’t stop there.
One section of the will included a provision for the guardians of our child. These funds are designed to help offset the cost of having another child (or children) to the household and can be used to buy a larger car, make an addition to the home, help with incidental costs, etc.
Factors to consider:
- Guardians housing and vehicle situation
- Food and clothing
- Medical expenses
How much should you leave for the care of your child(ren)?
The law firm we used recommended leaving at least $20,000 to offset the cost any housing additions or vehicle expenses. So my wife and I looked at each other and said, well if they recommend a minimum of $20,000, how about $50,000?
That was the number we wrote down and left it at that until the night after we signed our wills. Then we discussed that number and some other fun things like how much life insurance we need to buy. (we are currently under-insured, but are shopping for more life insurance – stay tuned for more on that topic).
Now that my wife and I sat down and thought about it a little more, we both feel that $50,000 is woefully inadequate for the long term care of our daughter. Our baby is only a few months old and would require almost 2 decades of guardianship. I can’t help but think the minimum we should have provided would be $100,000, if not more than that.
The topic of estate planning caught us off guard and is something we should have put more thought into. Unfortunately, our paperwork is signed, sealed, and delivered at this point, and redrafting our wills will probably cost a little extra (legal fees for drafting the new will, witnesses, notary public, etc.).
Our plan is to discuss this with our daughter’s chosen guardians and go from there. We also plan to address this the next time we update our will, such as if we move, have another child, or have another major life event. An estate plan can, and should, be modified to fit your needs as they change.
Do you have anything to add?
This is new ground for my wife and I, and we would love to read your responses if you have other ideas regarding how much to leave for your children’s care, or other related estate plan topics.