When we think about earning a living, many of us envision ourselves clocking in for a paycheck to support our families. But let’s take a moment to appreciate the invaluable contributions of stay-at-home parents. They keep the household running smoothly, ensuring that their family members have everything they need to thrive. However, what happens if something unexpected occurs, and the stay-at-home parent can no longer fulfill their role?
Considerations: The Cost of Care
Traditionally, stay-at-home parents take on numerous responsibilities, including:
- Childcare
- Home cleaning and maintenance
- Transportation for family activities
- Meal preparation
- Shopping for clothes and household supplies
- Managing household schedules and appointments
While these essential tasks may sometimes go unnoticed, it’s crucial to consider the financial impact if the stay-at-home parent were no longer able to perform them. The employed parent might need to find extra income to hire help or sacrifice personal time to handle these responsibilities.
A Multifaceted Approach to Protecting Your Family
To ensure your family is properly safeguarded with comprehensive financial and estate plans, collaboration is key. Here’s how to get started:
- Quantify the Value: First, assess the cost of the services provided by the stay-at-home parent. A financial advisor can help you calculate these figures accurately, ensuring you understand how much it would cost to replace those efforts.
- Insurance Needs: Once you have a clear picture of the costs, it’s important to consult with an insurance agent. They can guide you in determining the right amount and type of insurance to consider. Remember, life insurance is not just about death – it’s also essential to plan for scenarios where the stay-at-home parent might become disabled or incapacitated. Disability insurance can provide critical financial support during such times.
- Tax Planning: Meeting with a certified public accountant (CPA) or tax preparer can also be beneficial. They can ensure you’re claiming the right credits and deductions on your annual income tax returns, maximizing your family’s income.
Additional Planning Considerations
In addition to the strategies mentioned above, having a well-crafted estate plan can ensure that your assets are protected and distributed according to your wishes. Without a plan, your state’s default succession laws will apply, which may not align with your preferences.
One key focus of our practice is ensuring that life insurance proceeds are safeguarded from creditors and used to support your intended beneficiaries. Naming a trust as the beneficiary of a life insurance policy is a smart way to achieve this.
- Revocable Living Trust: This type of trust allows you to maintain control over your assets while ensuring that, upon your passing, the life insurance policy’s death benefit is directed to the trust. The trustee will manage the funds according to your instructions, protecting them from creditors and other undesired claims.
- Irrevocable Life Insurance Trust: This trust provides an additional layer of protection. It can both own the life insurance policy and be named as the beneficiary. By making annual gifts to the trust to cover premiums, you can ensure that the death benefit is removed from your taxable estate, potentially saving your loved ones money on estate taxes.
Choosing a Guardian for Minor Children
If you have minor children, it’s essential to name a guardian to care for them if something were to happen to both parents. Although you can specify a guardian in your will, it may not take effect until after your death. To ensure your wishes are honored, consider documenting your choice for guardianship in a separate legal document, compliant with your state’s laws. Without this proactive approach, a judge will decide on a guardian based on state laws, which may not align with your preferences.
Your Family’s Protection Is Our Priority
Protecting families is our passion, and we’re here to help you navigate these important decisions. Whether you need assistance with estate planning, insurance guidance, or guardianship matters, we’re ready to partner with you to ensure your family is protected.
At Cheever Law, APC, we don’t just draft documents; we ensure you make informed and empowered decisions about life and death for yourself and the people you love, starting with a valuable and educational Life & Legacy Planning Session. This will allow you to get more financially organized and make the best choices for the people you love. If you have already completed your estate plan, we will review that plan at your Life & Legacy Planning Session to ensure that it will work the way you intend and address any holes or gaps that may be present if circumstances have changed since you executed your plan.
To learn more about our one-of-a-kind systems and services, contact us or schedule a no-obligation 15-minute introductory phone call today.