Families with young children should add a clause to their wills that names a guardian, in the event both parents are unable to provide care.
If you die without a will, you won’t have the opportunity to designate the guardian you want to care for your minor children. Instead, a judge will decide this. It may be someone you really never considered for that essential responsibility.
That’s why a will is so critical for families with young children. You can also avoid or at least lessen conflicts between relatives by adding a guardianship clause in your will.
Without a will, the state’s intestacy laws will dictate how your cash and assets will be distributed when you die. Typically, the intestacy laws say that your estate will pass to your closest living relative—your spouse, your kids, your parents, and your siblings.
These laws also stipulate how assets are divided among your family members. For example, in New York, your surviving spouse gets 50% of the balance, and your children get everything else.
But what if that’s not what you want? Then you better have a will.
It’s also important to know that your will won’t override your beneficiary designations for your retirement accounts and life insurance.
While you’re at it, a couple of other documents you’ll need to get your basic estate plan together, are your financial power of attorney and medical directives. Power of attorney grants a person that you name to oversee your finances if you’re incapacitated. Medical directives allow you to state how you want to receive health care if you’re unable to communicate your wishes.
These two documents keep your loved ones from having to make tough decisions during a stressful time. They also make certain your wishes are followed.
Reference: CNBC (August 8, 2018) “You don’t have to be wealthy to put this estate plan into place”