As new parents, your focus is naturally on the present needs of your growing family. However, it’s equally crucial to plan for the future. One important step is creating an estate plan.
It’s never too early to start estate planning, but you must ensure you have at least a basic plan set as quickly as you can after you have a baby. The sooner you begin, the sooner you can better ensure your family’s security.
Plan for finances
Catalog everything you own, including properties, bank accounts, investments, and personal belongings. This gives you the information you need to create an estate plan that can provide for your children if something happens to you.
- Consider a Will: A will is a fundamental component of an estate plan. It details how you want your assets distributed after your passing. Choose a trustworthy individual to carry out the terms of your will.
- Establish a Trust: Consider setting up a trust for your children to better ensure that they are financially taken care of in the event of your untimely death. Appoint a responsible trustee to manage any trusts until your children come of age.
- Life Insurance: Life insurance can provide essential financial support for your family. Ensure that your policy aligns with your family’s needs.
- Beneficiary Designations: Update beneficiary designations on retirement accounts and life insurance policies to include your children.
- Plan for Taxes: Understand potential estate tax implications.
Make sure that your loved ones know where to find all this information. It may behoove you to write a letter of instruction that contains crucial bits of information about your estate plan.
Plan for your child’s care
Another important facet of estate planning as a new parent is making sure your children will be raised in the manner you intend. Making sure you have that plan outlined and that you have instructions set if you become incapacitated is beneficial.
- Name Guardians: If something happens to both parents, who will care for your children? Discuss potential guardians and get their agreement before including them in your will.
- Create a Living Will: Also known as an advance healthcare directive, a living will outlines your wishes for medical treatment if you become incapacitated.
- Power of Attorney: Assign a durable power of attorney to handle your financial affairs if you are unable to do so.
Navigating the world of estate planning as young parents can be challenging, but it’s an important step in safeguarding your family’s future. By seeking legal guidance and engaging in careful planning, you can better ensure that your loved ones are protected, no matter what the future holds.