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It's not really news that most people don't have an estate plan. What's truly scary is that parents of minor kids are apparently even less likely than others to have prepared a will.
That's the conclusion of a recent study by the self-help Web site LegalZoom, which commissioned a survey that found 70.2% of American adults overall and 74.4% of parents with children under 18 had no will or other estate documents.
Interestingly, the very reason parents need a will may be one of the major impediments to getting the job done, and that's agreeing on a guardian. Nearly one out of five parents surveyed said guardianship issues were holding them back.
That corresponds with estate planner Colleen Barney's experience.
"People who can't agree on guardians won't do anything," said Barney, a co-author of the book "Best Intentions: Ensuring That Your Estate Plan Delivers Both Wealth and Wisdom."
Not everybody actually needs a will, as I wrote in "3 legal papers you shouldn't live without." If you don't have kids and really don't care what happens to your stuff, your state has rules for distributing what's left after you die.
The only people who always, without a doubt, need a will are parents of minor kids. There's typically no easy mechanism for determining who takes over when the parents of minors die. Your children could wind up the center of an ugly court battle, be foisted on a relative who doesn't want them or be stranded in the foster-care system if nobody steps up in time.
Common-sense solutions
If you care about your kids, this is a no-brainer, and you shouldn't let the sun set on another day without taking care of this issue. Here's what you do:Deal with it. Yes, death is scary, and contemplating your own mortality is icky. But you're the grown-up, so get over it and get this done.
Lower your expectations. Be real: Is there anyone on the planet, including your spouse, whose parenting skills are perfect in your eyes? So why are you expecting perfection from a guardian? What you want is someone who will love your kids and raise them with the values that are most important to you.
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Widen your net. Many people pick family members to be their children's prospective guardians, but that's not the only option. Good friends, especially those who already have kids, might be a better choice in some situations. A neighbor could be a workable option for an older child who might otherwise have to be uprooted and moved across the country.
Keep it civil. If you're married, you'll have to find a guardian that both of you can endorse. That can get awfully tricky, particularly if you're advocating for one of your family members, and your spouse is advocating for his or her side. Avoid the temptation to criticize your spouse or your spouse's choice, which can just blow up into a pointless battle. Talk about the positive attributes you want a guardian to possess, and be ready to compromise.
By the way, if you're a single parent, your ex would typically get custody after your death regardless of what your will says, but you should consult an attorney for details.
Pick someone "for now." It's OK to have a "placekeeper" guardian, somebody who'll do in a pinch or whom you fully plan to replace eventually. Children and relationships change, and you can alter your will later to name someone else.
Get your candidate's OK. Guardianship is too big a responsibility to spring on somebody, so make sure the person you want actually wants to serve. It's generally smart to pick just one person as primary guardian rather than a couple; the pair could split up, or one member could die, complicating your estate plan.
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Picking a guardianAsk someone who shares your values and circumstances, and make it official with a will.
Have a backup. That said, there's nothing wrong with identifying the second half of a couple as the backup guardian, if you'd be pleased to have him or her take over in case the spouse you named as the primary guardian was dead or couldn't serve for whatever reason. If you really don't want your brother-in-law to have the kids should your sister die, though, identify someone else as the backup.
Keep the money separate. Occasionally, there are folks who are great with money and great with kids, but the skill sets don't necessarily go together. It's perfectly acceptable, and often preferred, to choose someone other than the guardian as trustee of the kids' assets (any money, property and life insurance proceeds they'll inherit should you die).
Choosing separate people for these different functions puts a check-and-balance system in place because there's at least one other person monitoring how your kids' money is spent.
Also, realizing that the money person can be separate from the "parent" person may be all it takes to break through an impasse with your spouse, said Los Angeles estate attorney Jon Gallo, a co-author of "The Financially Intelligent Parent: 8 Steps to Raising Successful, Generous, Responsible Children."
"Most of the arguments (stem from) a lack of understanding of the two functions," Gallo said.
Once you've settled on a guardian and a trustee, an attorney can guide you through the rest of the process. A simple will can cost as little as $200 to $300, although a more complex estate plan will be pricier. You can even do it yourself, using software such as Quicken Willmaker or LegalZoom's service.
But if your net worth is high or your situation is complex -- you have contentious relatives who may contest the will, say, or children from more than one marriage -- you probably should get a professional estate planner's help. Make the appointment today.
Columns by Liz Pulliam Weston, the Web's most-read personal finance writer, appear every Monday and Thursday, exclusively on MSN Money. She also answers reader questions on the Your Money message board.
Published June 4, 2007
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