If you’re going to be a first-time parent or you already have kids, we know you’re ready to take on the world to protect your child(ren). Yet, many parents forget that estate planning is a critical element in caring for your child, and that your estate plan must be regularly updated to account for additional children, newly acquired assets or changes in family dynamics. The Motely Fool lists some estate planning steps to take in their article, “If You’re a New Parent, Take These 4 Estate Planning Steps”, so you can rest easy knowing your children are protected even if you’re unable to be there for them.
- Get Life Insurance – Life insurance is a fantastic financial tool you can use to ensure that your partner and child will be taken care of financially if you die. Buying life insurance provides funds that your partner will be able to use to support themselves and your child now that they are a one income home. In the tragic event that both you and your partner die, if your estate is properly planned, the funds can be used to raise your child and perhaps help fund their education.
Additionally, if you have a special needs child, you can use life insurance to provide protection for your child after you’ve passed. Note that you should not name a special needs child directly on a beneficiary designations form. You will need to set up a special needs trust in order to preserve any governmental benefits provided to your child.
Another happy benefit of purchasing life insurance when you’re younger is that your premiums will be lower.
- Name a Guardian – If you don’t name a guardian for your child, and both you and your partner were to pass away, then the court will determine who will take care of them, and who has custody. As you work with an estate planning attorney, you will create a will, and name a guardian for your child. As you await the arrival of your child, be talking with your partner about who you should be name as guardian(s). You will want to name someone who shares your values and will raise your children consistent your wishes. You can always update who you’ve named after your child is born. Work with an estate planning attorney who has an ongoing client care program so you can make changes at no additional cost.
- Set up a Trust – Before the age of 18, your children are not considered adults, and therefore cannot control your assets if you were to pass away. Also, while your children may be legally considered adults at 18, they may not be ready to be in control of their inheritance. Setting up a trust enables you to address each of these issues/concerns.
In your trust, you can name a designated person(s) (named a trustee) who will manage the assets on behalf of your child. You will provide instructions on your wishes on how to use the funds. Additionally, you can set up instructions for when your children can take control of the trust and how the assets will be used,. A trust is the best way to ensure your children will be taken care of financially. In order to ensure the guardians and trustees you name take care of your children consistent with your wishes, you need to communicate those wishes to them. To help with the success of this, at Family Estate Planning Law Group, we host a Family Care MeetingTM where you can walk them through your plan, values, and wishes, while also providing access to our team to answer questions they may have.
- Update Beneficiaries –One of the most important steps is to update your beneficiary designations. Naming minor or young adult children is never a good idea. In addition, make sure that old beneficiary designations that name a parent or sibling before you were married is updated to name your spouse or a “trust” for the benefit of your children.
If you neglect these estate planning steps or don’t work with an estate planning attorney who has an ongoing client care program, then you are leaving your child(ren) and your partner unprotected. Don’t wait establish your estate plan. If you’re expecting a child, start getting your ducks in a row now, and not when you are overcome with the joys of being a new parent.
Note as well, if you and your partner are not both biologically your child’s parent, then estate planning becomes even more vital.
To learn more about this and other estate planning topics, visit our website, explore our blog, and schedule your complimentary consultation today!