With a child on the way or having recently arrived, it’s helpful to plan for their well-being should the unforeseen happen. An estate plan outlines your wishes by putting everything in writing with specific legal documents. This ensures your words are the authority for what happens to your children and your assets.
You aren’t required to handle your entire estate plan at once, or even on your own. There are plenty of resources online, and you can always consider working with an estate planning attorney. They’ll work with your unique situation and personal goals.
Wish you had extra money to put towards your debt?
Sign up for the 5-day "Hack That Debt" email challenge to find cash hiding in plain sight.
Guardianship of your child(ren)
New parents typically consider long-term guardianship first, often by naming a godfather and godmother. Note, a lot of people think that just naming a godparent in church is enough to establish guardianship; however, this may not stand up in court. Make sure whoever you choose is legally designated by filling out the required court forms. This process can be more nuanced than people initially think. For example, a married couple named as dual guardians may see their union end at some point, leading to a custody battle over your children. It’s advisable to name guardians unrelated and unmarried to each other.
Short-term guardians also play an important role. In the case of an emergency, without a short-term guardian, your child may go from the care of a babysitter right to child services. By listing a nearby and legally qualified friend or family member as a short-term guardian, you avoid this scenario.
Tip: “Guardians are responsible for the care and well-being of children, but the financial responsibility still falls with the parents, even after their passing,” said Gabriel K., an estate planner in New York City. “Life insurance is a simple means to provide for your children.”
Will or revocable living trust?
First a word on probate. Probate is a court-supervised process that pays off outstanding bills, as well as finalizes distribution of your assets after your death. Many people consider probate to be a time-intensive and expensive process. It’s also important to note that the probate proceedings are available for public view. This means anyone can visit the court records and access copies of the probate proceedings, including how much money was transferred to your children.
Traditional, will-based estate plans, while easy to implement, do not avoid probate — in fact, they guarantee probate. Another option for your estate plan is a revocable living trust. When properly structured, a revocable living trust avoids probate entirely. The proceedings and the transfer of assets are privately handled in a lawyer’s office. The process tends to be easier and more affordable. Either way, both will and revocable living trusts outline how your assets are to be handled when you die.
Tip: When leaving assets to a minor, it’s advisable to spread distribution over a period of time, rather than one lump sum. Otherwise, upon turning 18, your child may spend his or her entire inheritance.
Naming an executor of your estate
When you choose an executor, this person will guild your will or revocable living trust through probate or other proceedings. You won’t need a legal scholar, just an honest, diligent person.
Make your wishes known regarding autopsy, burial vs. cremation, and organ donation. A simple plan can help alleviate family stress and the potential for in-fighting.
Granting powers of attorney
A will or revocable living trust will serve as the guiding document. In the event of your death, it’s important to officially name your spouse and one other individual as a backup for power of attorney. This includes financial power of attorney to help pay any bills, as well as a separate healthcare power of attorney who can make decisions on your behalf for healthcare and treatment.
Living will: In the event that you become incapacitated, this document outlines your wishes for life support, pain medication and other health concerns.
HIPAA Authorization: This statutory form names your healthcare agent, a distinction that differs from healthcare power of attorney by entitling a person of your choosing access to healthcare records.
As a new parent, estate planning might seem like one more item on your to-do list. Make sure you don’t overlook it. A simple plan for your estate can help ease the burden on you, your spouse and your children should something unfortunate happen.
Feel confident knowing that your family is protected with trusted, affordable Term Life Insurance. Click here to get a free quote today.