It is better to have a plan in place for the unimaginable, than to leave a family without guidance and protection.
Experienced parents smile at memories of how tiny babies, especially first-borns, completely turn households upside down. Welcoming a new baby means that parent’s lives change, and in addition to diapers, a cribs and onesies, parents need an estate plan, as reported in the article “5 Legacy Planning Basics for New Parents” from ThinkAdvisor.
Take time to talk through high-priority items. Create a staggered checklist—starting with today—and set attainable dates to complete the rest of the tasks. Here are five things to put on that list:
- Last Will and Testament. A Last Will and Testament gives the probate court your instructions on who will be your children's guardian, the individual or individuals who will be in charge of and care for your children, if something happens to both you and your spouse. Parents also should think about how they want to share their personal belongings and financial assets. Without a will, the state decides what goes to whom. Lastly, a will must name an executor or personal representative, the person you trust to properly carry out the instructions set forth in your will and administer your estate.
- Beneficiary Designations. Review your beneficiary designations associated with your financial accounts when you create your will, because you don’t want your will and beneficiary designations (such as for life insurance policies and investment accounts) telling two different stories. If there’s an issue, the beneficiary designation overrides the will. All accounts with a beneficiary listed automatically avoid probate court.
- Revocable Trust. Created by an experienced estate planning attorney, a trust has some nice benefits, particularly if you have young children. All property and assets titled in or owned by a trust avoids the need for probate, and the accompanying fees and hassles of probate. A trust also provides some flexibility and customization to your plan. You can instruct that your children should only receive distributions for specific purposes, or you can allow your children to become the trustees of their own separate trust shares, which can afford creditor and divorce protection for the assets they inherit.
- Powers of Attorney . Financial and health care powers of attorney are very useful in the event of incapacity. These documents designate individual you trust who can make important financial and medical decisions when you’re incapable of doing so.
- Life Insurance. Usually people don’t purchase life insurance until they have a child or purchase a house with their spouse. If you already have life insurance, that’s a start. Consider the cost of raising a child to adulthood, including college costs. Do you have enough life insurance in place? Every time you welcome a new family member, your life insurance needs increase. Make sure that your life insurance coverage is enough to protect your family.
If you are a new parent, contact the Soto Law Firm today to speak with attorney who can help you get the process started.
Reference: ThinkAdvisor (March 7, 2019) “5 Legacy Planning Basics for New Parents”