6 estate planning steps for new parents
When your first child is born, you’re obsessed with setting up the nursery, getting baby clothes, and trying to figure out a brand new sleep schedule. Provided you can sleep at all, that is. This is an exciting and chaotic time, a huge transition in your life, and there’s a lot to be done.
One key thing to remember is that you now have a direct heir. This is someone you’re responsible for and someone who will inherit your assets when you pass away. You likely don’t think that’s going to happen any time soon, and it probably won’t, but it’s crucial to start planning right away. It’s one of the best things you can do to take care of your child for years to come, regardless of what happens. Six key things to consider include:
1. Drawing up a trust for your child.
If you pass away while your child is young, you can put assets into this trust to be distributed over time or allocated for future expenses, like going to college.
2. Picking guardians.
You can choose who you want to take care of your child in the event that you cannot do so. Many people choose siblings or parents, but you can also choose close friends. This way, you know a caring adult will be there for the child to provide a good home and help make important decisions going forward.
3. Choosing your beneficiaries.
You don’t have to leave the entire estate to a single child. You can update your estate planning documents as you have more children or you can choose to distribute your assets to other family members, like nieces and nephews.
4. Picking an estate executor.
This person will help distribute assets in accordance with your will. This can be complicated, especially with investment portfolios, life insurance policies, and other such assets, so it’s important to choose a competent executor who will make sure your wishes are followed.
5. Creating a legal power of attorney.
If you are injured or sick and can’t take care of matters on your own, you can give someone else the legal power to make payments, transfer funds, and take care of other things that would typically be left up to you alone. A medical power of attorney could also be created, giving your representative the ability to make decisions about medical care if you’re not able to make them yourself.
6. Planning out your funeral.
Through estate planning, you can buy a burial plot, plan out the service, and put aside the funds to cover the costs. This takes the pressure off of other family members and ensures that all of your wishes are respected.
You do so much to care for your child after he or she is born, investing time, energy and emotion into this new stage of your life. Make sure you take a moment to also consider what must be done to care for your child if you’re not around. This way, you have peace of mind knowing that everything is taken care of and your new son or daughter will have a healthy, happy life no matter what.