What Happens to Our Money and Kids When We Die?
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For many years my wife and I have been avoiding this question – What will happen to our money and our kids when we die? Even worse than worrying about our estate (our money) is what would happen to our children if we were both to die at the same time?
This uncertainty around the future of our children led to many sleepless nights and tons of worrying over the past 15+ years.
Fortunately, we finally made the decision to take action with our estate planning and we feel so much better!
Recently, we sat down with a lawyer to have a Will drafted for the both of us … along with other important financial and medical documents in case either (or both) of us were to die.
Well, I guess we will both die (there’s no getting around that) … but if we were to die in the next 10 years or so. That is about the time our youngest child would be off to college.
After we made our last signatures on our official documents, my wife and I both agreed that was the best $375 we ever spent!
The meeting with our lawyer was a success and worth every penny. It also served as the first few steps in our overall estate planning checklist.
Let’s take a look at this checklist and plans for what will happen to our money and kids when we die.
Estate Planning Checklist
Below you will find a detailed estate planning checklist that we are working from. Several of the checklist items have been taken care of, while others are still in the works.
Our goal is to continue tweaking our estate plan when necessary while continuing to work through our other checklist items.
Here is our list of our estate planning items in order of priority.
1 – We Drafted a Will
Having a Will drafted up for the both of us was our #1 priority. We have specific guidelines for who would take guardianship of our children if both of us were to die.
There are certain family members who we specifically would like our kids to go and live with in the event of our deaths.
And there are certain family members who we NEVER want our kids to go and live with.
So we had our Will drafted to specifically state exactly who should get custody of our kids in a preferential order. We listed 3 potential guardians (in order) to take custody of our kids.
We also specifically listed the family member who should not get custody of our kids. This was something that had been on our minds for a while and we wanted to give the courts no doubt on our wishes.
Note – I would like to point out that the family members listed in the Will to get custody of our children are all aware and honored we picked them. We didn’t want to surprise these family members with anything … so we had a discussion with each of them about our wishes prior to preparing our Will.
2 – Creating a Revocable Living Trust
While not as much of a priority as having a Will drafted for us … creating a revocable living trust will help everyone know where our assets should go in the event we die.
My wife is the first beneficiary for my assets and I am for hers. That makes sense … but what about contingent beneficiaries if we were both to die?
The obvious choice is that we would leave our assets to our children. But that gets a little tricky having 3 kids who are all minors. And what happens when our oldest becomes an adult and our other two kids are still under the age of 18?
By setting up the revocable living trust, we were able to define the trust as the contingent beneficiary in the event the primary beneficiary was deceased.
The trust also has specific guideline of how the money should be split up between our beneficiaries and when.
3 – Health Care Directive
If I become incapacitated … who will make decisions for me about my health?
In addition to our Will and Trust, we also defined our health care directive as part of our estate planning.
What this means is that if I cannot make decisions for my health, then my wife will have the authority to make them for me. And the same goes for her.
In addition, we have defined an alternate for each of us to make medical decisions in the event that both of us are incapacitated.
The health care directive also states what can and cannot be done to our bodies after death as well as our wishes for burial or cremation.
This wasn’t as much a priority for us as having the Will drafted … but is still important for our loved ones we would leave behind. It makes the decision easier for those involved to know our wishes.
4 – Financial Power of Attorney
Similar to the health care directive we created, we also defined who has financial power of attorney in the event that we become incapacitated or unable to handle our own affairs.
This is the person who would have control over our finances and could help keep the bills paid while we are unable to.
My wife is the primary agent on my financial power of attorney and I am on hers.
In addition, we have defined an alternate for each of us to make financial decisions in the event that both of us are incapacitated.
In our case, we named the same person for both medical and financial … but that isn’t a requirement. It just happened to work out that way for us.
Additional Estate Planning Checklist Items – in Process
The checklist items listed above (Will, Trust, Medical, and Financial) were all taken care of in our estate planning meeting with our lawyer. While those items were necessary and important, it doesn’t mean we are stopping there with plans for our estate.
In addition to those important items, we are also working on the following –
- Update Beneficiary on Financial Accounts & Life Insurance – Based on setting up our trust, we are in the process of updating the contingent beneficiary on all of our financial accounts to use the trusts name. This is in place of listing all of our children’s names. The trust will handle how our assets are divided and when.
- Finding a Secure Place to Store Our Documents – We don’t have a safe or fireproof lock-box to store important documents. So we need to get one for our important paperwork … including the Will and Trust. In addition, we need to let our family members know who are responsible for our affairs as to where these documents exist. We wouldn’t want them scrambling around looking if they ever needed them.
- Prepay for Funeral Expenses – Eventually we will likely try and prepay our future funeral expenses. We are still hashing out these details and want to take the pressure off our kids when the time comes to plan any funeral arrangements.
- Create an “Upon My Death” Document – Outside of our Will and Trust, this is the single most important document that we can have in our estate plans … especially if I were to pass away before my wife. This document details all of our family’s finances from where our mortgage is paid to the different travel rewards credits cards we have open … and everything in between. Since I do about 95% of our finances, I would hate for something happen to me and my wife not know how to buy groceries or pay our property taxes. This document would be kept with our Will and Trust so in the event something happens to both of us … then our financial power of attorney agent would know of all our accounts. I can’t stress enough the importance of this information!
As you can see, there is plenty of work that can go into estate planning. We are much more at ease now that we know what will happen to our money and kids if (and when) we die.
These documents are not set in stone either. Let’s say in 5 years we have things change in our lives, then we will update them accordingly as life happens. In the meantime, we know that our kids will be well taken care of by the decisions we have made.
Now it is time for us to complete our “upon my death” document so that my wife (or anyone else that needs it) knows all of our finances. And what to do if I were to die and how to continue being able to pay the bills.
Do you have an estate plan in place? What has been your experience in the process of estate planning? I would love to here feedback about your sitatuion.