Most Americans strive to earn a decent-sized paycheck to support themselves and their families when they work. Stay-at-home parents, however, work to provide valuable non-financial contributions to their families every day. A partner's domestic and emotional labor ensures that the home runs smoothly. They also ensure that their family members have what they need to be successful and happy. How would the family's needs be met if something were to happen to the stay-at-home parent?
As an estate planning attorney in Austin, when you hire me, I make your family's concerns, my concerns. Part of that is ensuring that I think about how to protect your family in a holistic manner. This means thinking of issues that other attorneys often overlook. Protecting the value of your family's domestic and emotional labor is just one example of my dedication to helping clients achieve their life and legacy goals.
Traditionally, the stay-at-home parent is responsible for
Many of these tasks and responsibilities may be overlooked or underappreciated daily. Have you considered how much money or time you would need to complete them without your stay-at-home partner? The employed parent would need an additional source of income to outsource the tasks. Or they would have to take time away from their job or free time to complete the tasks.
We believe that for you to adequately protect yourself and your family with comprehensive financial and estate plans, it takes a team. First, you need to quantify the cost of the services provided by the stay-at-home parent. Assessing the value of domestic and emotional labor can be tricky. But this essential task helps you know how much money or time performing these tasks will take. A financial advisor can assist you with making sure that these numbers are accurate. They can also help you determine if the employed parent should make more significant contributions to their retirement account. Alternatively, they might suggest contributions to a spousal individual retirement account for the stay-at-home parent.
When thinking about estate planning, many people think of using life insurance solely in the event of their death. However, it is also essential to plan financially in case the stay-at-home parent were to become disabled or incapacitated. This is because they would likely be unable to complete the same tasks as they did before. You may be able to do this type of planning by obtaining disability insurance. Then, after you understand what it would cost to replace the stay-at-home parent's efforts, you must meet with an insurance agent who can counsel you on the right amount and kind of insurance you need to obtain.
It may also be a good idea to meet with your certified public accountant or tax preparer to make sure that you are claiming the correct credits and deductions and noting the allowable expenses on your annual income tax returns to maximize your family's single income.
In addition to the items mentioned above, a properly drafted estate plan can ensure that your money and property are protected and used in a way that matches your ultimate wishes. If you have not created an estate plan, the state's default plan will take effect upon your death. Although the laws in each state vary, your money and property will generally go first to your surviving spouse and then to your
in that order, depending on who survives you. Each person's amount also varies depending on your state's law.
One thing that we focus on to protect families like yours is making sure that any life insurance proceeds are protected from your beneficiaries' creditors and predators and are available to support the intended heirs according to your wishes. One way to do this is to name a trust as the beneficiary of the life insurance policy. In this way, the family protects the funds required to replace the domestic and emotional labor of the deceased stay-at-home partner. There are two different types of trusts that can protect life insurance proceeds.
A revocable living trust is one that you create during your lifetime. You can change it until you die or become mentally unable to manage your affairs. In most cases, you are the trustee and continue to manage the money and property in the trust. In addition, you can continue to use the money and property during your lifetime. If you become unable to manage your financial affairs, a successor trustee you previously selected can step in. They can do so without court involvement and manage the trust on your behalf.
For individuals with accounts and property valued below the current lifetime estate tax exemption amount or who have already set up a trust, naming a revocable living trust as the beneficiary of a life insurance policy can be helpful. Naming the revocable living trust as the beneficiary ensures that, at your death, the policy's death benefit will be paid to the trust to be used by or for the trust beneficiaries' benefit according to the instructions already in the trust agreement. Because the trustee must follow the trust's instructions, we can design a plan better to protect this money from your beneficiaries' creditors, divorcing spouses, or other undesirable people.
An irrevocable life insurance trust is an added layer of protection. It can own the life insurance policy and be named the beneficiary. You can create an irrevocable life insurance trust either by transferring ownership of an existing policy to the trust or by the trust purchasing a new policy. Using your annual gift tax exclusion, you make cash gifts to the trust to pay the insurance premiums. Upon your death, the trust receives the death benefit, and the trustee distributes the money according to the instructions in the trust document. Suppose you have accounts and property valued close to or above the current lifetime estate tax exemption amount. In that case, this strategy allows you to remove the value of the life insurance policy and the death benefit from your taxable estate, potentially saving your loved ones money on estate tax.
We can also help you name a guardian for your minor children. If the other legal parent is still alive and can care for the minor children, they can continue to provide care or assume caregiver responsibilities. It is also a good idea to plan for what would happen if both legal parents could not care for the children, just in case. Although you can name a guardian (and multiple backup guardians) for a minor child in a last will and testament, this document does not become effective until you die. Therefore, in a separate writing that meets state law requirements, you should also name a guardian (and multiple backup guardians) to care for your minor children if both parents are alive but unable to provide care.
If you do not proactively and legally establish your choice for your minor children's guardian, a judge will decide for you. The judge will refer to state law regarding which relative would be first in line to be responsible for the children's care and custody. This person may or may not be the one you would have chosen. The law gives preference to family members, but the court does not have the time or resources to learn everything you know about these people before deciding on a suitable guardian. Choosing a guardian and a couple of backup guardians in writing gives you a voice in the proceeding.
Protecting families is our passion. Accounting for the value of domestic and emotional labor is not something every attorney takes account of. We welcome the opportunity to work with you to help protect you and your family. Schedule your appointment, or visit our website to learn more about our firm and process. We also have some valuable FREE resources available to get you started!
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14425 Falcon Head Blvd
Bldg E-100
Austin, TX 78738
