Six Estate Planning Tips For New Parents
There are a million ways your life changes when you have a child, and one of the things you must think about now is planning your estate. Here are some of the key issues to consider.
Make a Will and Appoint a Guardian
Probably your most important concern is to appoint a guardian for your child should something happen to you and your child’s other parent. In order to do that, you need a Will. If you already have a Will, you will want to amend it to provide for your child and appoint a guardian.
Name an Executor
When you create your Will, you will need to appoint an executor who will distribute your property, sell it if need be and pay your debts. You will want to choose wisely, because your executor will have a great deal of control of the assets that you may leave to your children.
Consider Creating a Trust
You may want to consider setting up a trust for your child. Trust assets need not go through probate, and it may save on taxes and give you more control over the distributions to your children depending on your circumstances.
Create Powers of Attorney and an Advance Medical Directive
All adults should appoint power of attorney for finances and for health matters should they become incapacitated. They should also have an Advance Health Care Directive with instructions for their health care.
This becomes even more important when you have a child. Should you become incapacitated and you have a financial power of attorney in place, your spouse will be able to get access to your accounts to pay necessary bills such as emergency medical bills for your child or regular expenses such as food and rent. You may just be starting out with your new family, and the need for power of attorney may seem hard to imagine, but anyone can be in a car accident or be struck by a sudden serious illness.
Buy Life Insurance
Life insurance isn’t part of your estate plan really, in that you won’t require your lawyer to draw anything up. But life insurance can be as important of an option when planning for the unexpected as creating a trust. If you or your child’s other parent dies unexpectedly, the family may find themselves short of cash both for every day expenses and to continue activities that are part of a child’s life such as dance lessons and ski trips. Life insurance can help the remaining family transition while minimizing financial impact on the child.
Review Beneficiaries for Accounts and Policies
Check your IRAs, 401 (k)s and life insurance policies to be sure your beneficiaries are up to date. If you have forgotten to change your beneficiaries to your spouse and they are still in the name of a relative, it may cost your family a great deal you had not anticipated.
Call Us When Your Life Changes
If there is a major change in your life such as a marriage or the birth of a child, call us as soon as possible to update your estate plan. Be sure to provide well for your new family even if you are unexpectedly taken from them.