Talking about your estate, and what its future holds after your death, is a subject that routinely gets ignored. As easy as it is to put this topic aside, it is not something you want to ignore – especially when you’ve recently started a family. By starting to consider estate planning for new parents, you can feel peace of mind in knowing that your children will be emotionally and financially better off in the event of your untimely death. The Hollywood movie version of estate planning tends to involve a lot of drama; especially when it comes to discovering who gets what. When in fact there is much more to estate planning for new parents than a will.
The following are some of the basic things to consider when planning your estate as a new parent. You should also consult an estate planning lawyer to determine whether or not there are any specific items to include in your plan. For example, if you have a special needs child, you may want to create a special needs trust. Or, if you’re an avid gun collector, it is prudent you consider a gun trust; otherwise, there could be significant legal problems your minor child will have to overcome.
Life insurance offers financial resources that your child would receive in the event of your death. This money would assist them in getting through the childhood, and into their adulthood.
A Living Will
A living will is the primary tool you’ll want to include in your estate plan. It essentially helps you to decide, ahead of your death, how your children and family will be cared for after your passing. The primary goal of new parents should be to name the guardians for your children. A will is the only way you can do this without leaving the decision up to the court.
Thinking about this could invoke various unpleasant emotions; however, it is better to make a decision now. If you don’t, your children could be left to caretaker that are not necessarily your first choice.
Your will can also be used to explain where your money, assets, and property will go to, and even specify how your pets should be taken care of – and by whom. Often, an estate planning lawyer will recommend new parents to create provisions for a testamentary trust. What this tool does is leave money in a trust for your children. Someone would be named to be in charge of this trust, and they will have the responsibility of maintaining it.
Some financial accounts will have payable on death designations or allow you to name a beneficiary. How you organize this will determine who will receive the money in these accounts. Bare in mind, whatever is included in these documents automatically supersedes what is written in a will. For example, if you listed your ex-spouse as a beneficiary on a POD account, and then named your new spouse as a beneficiary in the will, your ex would still receive the money in the event of your death. Common beneficiary designations include:
- Employer retirement plans
- Investment accounts
- Saving accounts
- Checking accounts
- Life insurance
Health Care Power of Attorney and Durable Power of Attorney
A health care power of attorney will name someone to make medical decisions on your behalf in the event you’re unable to do so on your own. Whereas, a durable power of attorney will name someone to manage, and make decisions, for your finances.
By Planning Your Estate as New Parent, You Gain Peace of Mind
If you take the time to consider all of the elements related to estate planning for new parents, you can put your family in a position that ensures financial and emotional support if you should pass away.