Estate Planning for New Parents
As if sleep deprivation and diaper blowouts weren’t making your life hard enough. While you’re in the haze of joy that follows bringing a new child into your family, estate planning is probably not high on your list of jobs you want to tackle. But like sacrificing sleep and changing diapers, estate planning is something you do anyway because it’s in your child’s best interest. Jump in, make some big decisions and then get back to bonding with your family, confident in your ability to take care of the ones you love.
Questions to Ask Yourselves
Everything feels incredibly high-stakes when you’re a new parent. Suddenly you have to make dozens of decisions every day, and you’re constantly unsure whether you’re doing things right. While your choice of diaper brand won’t dictate your child’s future security, the decisions you make around estate planning actually might – so this process really does deserve your thoughtful time and energy. Think and talk through some of the biggest decisions you’ll have to make before sitting down to discuss them with an estate planning attorney.
Issues of guardianship tend to be one of the heaviest parts of estate planning for new parents. If you don’t name a chosen guardian and you and the child’s other parent both die, the courts will be involved in appointing a suitable guardian, and the final choice may not line up with your wishes. This may be an easy decision if you have close siblings or other relatives. It can also be a fraught one, especially when you’re just figuring out yourself how you want your child raised. Keep in mind that you can make adjustments to your guardian designations later.
So: Who would you want to care for your child if you and your co-parent couldn’t do it? Who would raise the child with values that are similar to your own? Are they young and healthy enough to be able to handle the job? Can they manage money well? Would the person be willing to accept this responsibility? It’s generally a good idea to talk to your chosen guardian and get their agreement before creating your will. You may also choose a secondary guardian if the primary person is unavailable or unwilling to take custody, should the need arise. If your chosen guardian lives far away, you may want to appoint a temporary guardian who could care for the child until the permanent guardian can get there to take over.
Also, think about who you would want to serve as the executor of your will and as trustee of any trusts you establish for your child. This should be someone you trust to make responsible financial decisions with your child’s best interest in mind.
Important Estate Planning Tasks for New Parents
Your estate planning attorney will walk you through all your options and help you tailor your plans for your family’s needs, but you can expect these general tasks to be part of the process.
- Create a Will Your Will is where you will name your chosen guardian, so you’ll probably need to either create a Will or amend your existing one. Generally each individual needs a separate Will, even married spouses. You may also use your Will to state your wishes around who inherits your assets and property.
- Buy or revisit your life insurance policy If you don’t already have life insurance, now’s the time to get it. Life insurance could provide the financial security your family needs if one or both parents pass away. Both parents can buy policies for maximum protection. If you already have a policy, you may want to increase the coverage now that you have had a child.
- Create a trust or trusts Life insurance provides a financial safety net should you die while your child is still young. Some parents also choose to create trusts that provide for their children’s future needs. There are a few ways that trusts can be used in estate planning for new parents. Use a trust to provide for the child’s eventual educational needs, or to cover their living expenses if you do die early. Your named trustee will manage and distribute assets from the trust in accordance with whatever terms you lay out.
- Update your beneficiary designations Who will inherit your retirement accounts? If you have a 401(k), IRA or other accounts that require you to name a beneficiary, review those designations when you welcome a new child. While you may want to keep your spouse or another adult as the primary beneficiary for these accounts, you may decide to name your child as a secondary beneficiary until they reach adulthood.
These are just some of the general tasks involved with estate planning for new parents. Your family structure may make things more complicated, like if you’re estranged from the child’s other parent. New parents of adopted children may have additional needs around estate planning, too, at least until the adoption process is finalized. If you were to pass before the adoption was finalized, would your child be eligible to inherit your assets? These are the kinds of questions you’ll want to discuss while estate planning.
How can Ladimer Law help you walk confidently into this new phase of your life? We’re here to answer your questions and make it as easy and painless as possible to navigate the estate planning process. (And we’re going to want to see those baby pictures, too!) Need another reason to get started sooner rather than later? Join us for Wills in a Weekend, March 13 and 14, and walk away with the estate planning documents you need. The team at Ladimer Law is ready to help you with all aspects of estate planning for new parents. Reach out now to get started.