I am spending this week eagerly awaiting the arrival of my first grandchild. I know, this is old hat for many of you, and you are the lucky ones! But this is my first. What advice can I give the new parents without being too pushy or meddling,but imparting the wisdom of my age and experience? Make sure that you have an adequate estate plan, of course!
Parents of young children are usually so busy with their jobs and their young ones that they often do not think about what might happen if both parents were not there to provide for these little ones. Yet, now that the family is three and not just two, this has to be one of the most important things to consider. What we recommend is Wills with Trusts for Minor Children. What the Wills say is “everything to my spouse, but if my spouse does not survive me, then all to a trust for my children.”
How does this trust get funded when a young family’s assets are stretched with a mortgage, salaries that reflect just starting out, and small retirement plans? Term life insurance. Many employers provide life insurance as an employee benefit, but we do not recommend relying entirely on this. First of all it is usually not enough. Secondly, it is tied to a particular job, and as you know, jobs change. A young family should purchase as much individual term life insurance as you can afford, naming each other as primary beneficiaries on the policies, and then a trust under the Will of the surviving parent which is for the benefit of your children. This will insure that there will be funds available with which to raise these young ones should you not be there to do it yourself. Once they are grown up, you can cancel the insurance.
Listen to me. Grandma has spoken.