Four Things You Need to Know About Estate Planning for New Parents

As you waited to welcome your new little one, you probably tried to think of everything you needed in order to be prepared for their arrival. However, one thing that many new parents fail to consider is their estate plan. Estate planning is important for new parents as it allows you to make decisions now for the care and support of your child if you die or become incapacitated and can no longer make these decisions as the need arises.

Four Things You Need to Know About Estate Planning for New Parents

Estate planning is a heavy subject for many individuals as it requires them to think about what would happen if they die. As serious as the topic is, however, an estate planning lawyer can assist you with the preparation of the legal documents involved. Here is a look at four important actions you can take in order to ensure that your estate plan is as up-to-date as possible.

1. Set Up Living Documents

Living documents are established to cover your legal bases in the event that you are incapacitated and unable to make decisions for yourself. Your living will is generally a good place to start as it allows for the creation of a healthcare proxy—which is a document that designates someone to make decisions such as withdrawing life-sustaining assistance—as well as a power of attorney that allows access to your funds in order to care for your children.

In addition to a living will, many parents also create a living trust to which you can funnel your assets so that when you die, they can be easily transferred to your loved ones without the expense or hassle of probate.

2. Name a Guardian in Your Will

Most parents will have the discussion as to who would be best suited to take care of their child if neither they nor the other parent is able to do so. Unfortunately, these discussions often end with little action. It is important to not only name a guardian for your minor children in your will but to first ensure that the individual you are planning to name is comfortable with the extreme responsibility that comes with the designation. This is the person who will make decisions regarding your child’s healthcare and education and will be tasked with ensuring that your child has what they need physically and emotionally to become a healthy adult.

If you have decided to create a trust, you will also need to name a trustee, ensuring that someone is able to receive assets for use in the raising of your child or to hold those assets until your child reaches the age of majority.

3. Update Account and Beneficiary Information

Having a baby is a great time to make sure that life insurance policies and other important financial accounts are properly updated and that current beneficiary information has been provided. You should ensure that if the account involves finances needed to care for your child, the beneficiary you name is aware of this desire. However, you should not name a minor child as a beneficiary as they will not be able to own property and other types of assets until they are 18. Instead, the court will often appoint someone to oversee those assets until the child turns 18. This overseer could be someone you do not wish to have control of your assets, such as an ex-spouse or an estranged family member. 

4. Consider Life Insurance Policies

Because people are often young and in good health when they become parents, they do not think about life insurance policies or think it is an expense that they can avoid until they’re older. Unfortunately, young people who have just become parents often do not have large savings accounts either. If something happens to you and you do not have either a life insurance policy or a big savings account, there will be little money to assist with the care of your child. 

Obtaining life insurance policies for both parents is a good way of ensuring there is money available. However, you will once again be asked to assign a beneficiary, and as with other types of financial accounts, you should not name a minor child as a beneficiary as they will be prevented from receiving the money until they are 18. Instead, parents often name each other as beneficiaries or the named guardian for their minor children.

How to Learn More About Estate Planning for New Parents

Estate planning sounds complex, and it sometimes is, depending on the types of assets you have. For more information on planning an estate as new parents or to ensure that you have your estate planning documents in order, contact an estate planning lawyer.