01 Mar Estate Planning for New Parents
When you decide to grow your family, there are the obvious things to think about like buying a crib or stocking up on diapers, but before or soon after your child is born, updating your estate plan is something that needs to be handled. There are a few different components that go into establishing a comprehensive estate plan for your growing family, and we’ve outlined some ways to get started below.
Designate a Legal Guardian
Wills are normally set up to determine who you want your assets to go to in the event that you should die, but when a child enters the picture, it becomes so much more. In the case that you die, name your spouse as the legal guardian in your Will. In the case that both you and your spouse pass away, name an alternate guardian in your will to take on the responsibility of raising your children.
Consider a Living Trust
A living trust offers you the ability to outline where your assets will go both during your lifetime and upon your death. Typically you and your partner are the trustees, giving you both total control over the trust assets. Should you and your partner die or become incapacitated, you would name a successor trustee to manage the funds for your children’s benefit. That financial oversight can extend for the children’s minority and into their 20’s and beyond, depending on your objectives. You must also take the time to transfer over all of the assets you want to be part of your trust. Any assets not included in the trust at your death could be subject to probate proceedings.
Update Your Account Beneficiaries
As you expand your family, you should ensure that your retirement beneficiaries are updated accordingly. When a child enters the equation, name your partner as the sole beneficiary and designate the trust you created as the secondary beneficiary. While you’re updating your beneficiaries, it’s also a good time to understand the tax implications of your assets. Each type of asset must be specifically reviewed in conjunction with your overall estate plan to determine whether payment to a trust is appropriate
Estate planning for your newly arrived child is essentially building a clear path for your child’s future in the event that you and your partner are unable to be to take care of them yourselves. While this may not be the most comfortable conversation to have, it is one of the best things you can do for your child to ensure that they will be properly taken care of no matter what circumstances may arise.