Having a child opens a new world of responsibilities for parents. New parents can become so preoccupied with feeding and sleeping schedules that some important aspects can be overlooked. One area that is important to address when you welcome a new child is creating an estate plan to address concerns regarding the care of your children in the event of your untimely passing.
Proper estate planning includes ensuring your child will have financial security. If you do not have an estate plan, now is the time to create one. Your plan does not have to be overly complicated, but it should help your children to be financially provided for by designating funds for their care and explaining your preference for who will be responsible for them should you and the other parent pass away before the child turns 18.
What goes into a young parent’s estate plan?
Here are three things to consider regarding your estate plan, though this list is not all inclusive and should be discussed with your estate attorney:
- A will that names your heirs and designates a guardian for your children. Additional documents regarding guardianship may be available to ease the process for your chosen guardians. You can select anyone to be the guardian, though most people name trusted family members or close friends.
- A trust gives you indirect control over how your children’s money is used in their best interests. The trustee will manage the funds and spend them according to the trust provisions, which can include education and living expenses. You can also establish an age at which your child can receive funds from the trust, such as 18 or 21.
- Beneficiary designations on life insurance, retirement accounts, investment accounts, etc. should be reviewed regularly and you may want to update these so that your child (if of age), the trust, or another trusted person is listed as either a primary or contingency beneficiary.
A customized estate plan is one of the greatest gifts you can give to your children and family even while you and your spouse are still young and healthy. It is a good idea to work with an estate planning attorney to ensure your estate plan is appropriate for your needs. If you already have an estate plan, you may want to consider updating it due to your new arrival.