|
By John Poyser, Calgary Herald
Andrea dragged her husband, Brad, to a lawyer to get a will done. The two were in their early
thirties. They had little in terms of assets, and were busy with their first baby.
The legal fee for a proper estate plan was going to set them back $1,000 or so. It seemed like
a waste. Brad wanted to buy a new guitar.
One of the first questions the lawyer asked was who should take over parenting their child if
they both died.
Brad thought his parents would be best for the job. Andrea thought it should be her sister.
It took a discussion at home to work that through. Brad's parents were getting on in years,
and Andrea's sister already had two young children of her own. They decided on the sister,
who agreed when they asked. A clause was written into their wills to state that preference.
What would happen if that were left as a loose end and the two died while the child was at
daycare? Chilling to think about.
Draft wills were prepared. All of the wealth would go to the survivor. If Brad died first,
everything went to Andrea, and vice versa.
If both died, whatever was left was to be held in trust for their child until he turned 25.
Age 18 seemed crazy. It could be used along the way for education. Brad's parents would be
the trustees. That meant they would hold the money until the child was old enough, and dole
it out along the way for things like education.
The lawyer asked if there would be enough money? That was an ugly thought. The house
was mortgaged. They each had some group insurance at work that would pay out a year of
salary if one of them died. The survivor would be a single parent with one income. It
seemed pretty clear they would lose the house or have to go their parents for money.
That was a problem that could be solved. Each arranged for additional life insurance. Term
insurance is inexpensive for young people and each placed $750,000 of coverage on their life.
If one died, the other would be financially secure. If both died, the insurance would be paid
into the estate and Brad Junior would have a nest egg of $1.5 million. That would be more
than enough, even if they had another child or two and the estate had to be shared.
At the end of the day, after everything was signed, Brad and Andrea felt good about it.
They were acting like grown-ups. Brad could buy the new guitar later.
Most young people do not need to worry about having a will. That changes if they have
children.
A young couple should designate a testamentary guardian to take over the parenting role
if both should pass away. The designation is not binding. A court still has to approve the
arrangement if and when the time comes. Not designating someone leaves a disaster waiting
to happen.
It is also important young couples look at life insurance. What would it be like
to raise the child alone without financial backing? More to the point, who in the family
can be expected to support the child if the deceased parents failed to make adequate financial
arrangements?
An estate plan is like an infant car seat: both protect against an unlikely event, but
the protection is important. No one wants to take risks with their child.
JOHN POYSER WILL BE GIVING A PRESENTATION AT A PUBLIC FORUM ON
ESTATE PLANNING SPONSORED BY CANADIAN ASSOCIATION OF GIFT
PLANNERS, AT 9 A.M. ON APRIL 28, AT MOUNT ROYAL UNIVERSITY.
© Copyright (c) The Calgary Herald
Read more: http://www.calgaryherald.com/life/Estate+planning+crucial+young+families/6395904/story.html#ixzz1rlNnIFXN
| 
