When a child is born or adopted, the parents are excited to think about what lies ahead. However, in addition to all the other new-parent tasks on the list, parents must also address a less desirable task (an emergency preparedness plan or a disaster relief plan) which is: making an estate plan.
Estate Planning for young families can be surprisingly easy and affordable. But this problem won’t fix itself, so you must act. When a child comes into the picture, it’s critical for new parents to take the responsible step of making a plan, says Motley Fool’s recent article entitled “As a New Parent, I Took These 3 Estate Planning Steps.”
Completing an estate plan that avoids court and conflict for you and your family is simply the right thing to do. Plan now to protect your kids from life’s uncertainties.
As you need to do with your own personal, health care and financial decisions, you need to address who you would want to act “as a parent” for your kids should you not be able to act for them. Would you rather select the guardians (i.e., back-up parents) yourself, or let a probate judge make the selection without your input? Only through proper legal planning can you select the guardians. If you are married, you can check more about planning for married couples here.
There are two critical choices commonly faced by parents of minor children. First, who will take care of my minor children, if orphaned, and, second, who will manage their inheritance?
Life insurance. To be certain that there’s money available for your child’s care and to fund a college education, parents can buy life insurance. You can purchase a term life insurance policy that’s less expensive than a whole-life policy and you’ll only need the coverage until the child is grown.
Create a will. A will does more than just let you direct who should inherit if you die. It gives you control over what happens to the money you leave to your child. If you were to pass and he wasn’t yet an adult, someone would need to manage the money left to him or her. If you don’t have a will, the court may name a guardian for the funds, and the child might inherit with no strings attached at 18. How many 18-year-olds are capable of managing money that’s designed to help them in the future?
Speak to an experienced lawyer to get help making sure your will is valid and that you’re taking a smart approach to protecting your child’s inheritance.
Designate a guardian. If you don’t name an individual to serve as your child’s guardian, a custody fight could happen. As a result, a judge may decide who will raise your children. Be sure that you name someone, so your child is cared for by people you’ve selected, not someone a judge assigns. Have your attorney make provisions in your will to name a guardian, in case something should happen. This is one step as a new parent that’s critical. Be sure to speak with whomever you’re asking to be your child’s guardian and make sure he or she is okay with raising your children if you can’t.
Estate planning may not be exciting, but it’s essential for parents.
Contact a qualified estate planning attorney to create a complete estate plan to help your new family.
Reference: Motley Fool (Feb. 23, 2020) “As a New Parent, I Took These 3 Estate Planning Steps”
Suggested Key Terms: Estate Planning Lawyer, Wills, Intestacy, Probate Court, Inheritance, Asset Protection, Guardianship, Life Insurance, Financial Planning