Estate planning is something new parents need to put at the top of their must do list. I know you may be sleep-deprived, overwhelmed, and frazzled. But don’t let that become an excuse to put off your estate planning. Having a child dramatically changes one’s estate plan and makes having that plan all the more necessary, says ThinkAdvisor’s recent article, “5 Legacy Planning Basics for New Parents.”
Create a checklist—and set attainable dates to complete the items. Here are five things to put on that list:
Will. This gives the probate court your instructions on who become your child’s guardian (backup parent) if something happens to both you and your spouse. It also details how your property will be left for your children and names people who manage it for their benefit until they are of age.
Beneficiaries. Review your beneficiary designations for things such as bank accounts, life insurance and retirement accounts when you create your will, because you don’t want your will and beneficiary designations being in conflict. If there’s an issue, the beneficiary designation overrides the will, which might be a real problem.
Trust. Created by an experienced estate planning attorney, a trust has some excellent benefits, particularly if you have young children. Everything in a trust is shielded from probate court. This avoids court fees and the hassle of lengthy and ongoing court management over your property. A trust also provides customization of when your children can receive property and what it can be used for. For more information on strategies for customizing trust terms for children, review this post by the author.
Power of Attorney and Healthcare Directive. These are two separate documents, but they’re both used in the event you become incapacitated and unable to communicate. Power of attorney and health care agents make important financial and medical decisions when you’re incapable of doing so. Seriously, don’t go without these documents, as the court process that may be required in the event you fail to implement these documents (referred to as a conservatorship) can truly be a nightmare. For more information on a power of attorney, review this article, and for more information regarding healthcare directives, read this one.
Life Insurance. Most people don’t think about purchasing life insurance until they have children. Therefore, if you haven’t thought about it, you’re not alone – but it’s time to get on it. If you are among the few who bought a policy pre-child, consider increasing the amount to replace the lost income your child will need if something happens to you.
A qualified estate planning attorney can help make accomplishing all of the above a breeze.
Reference: ThinkAdvisor (March 7, 2019) “5 Legacy Planning Basics for New Parents”