The birth of a new child is a wonderful experience for parents, and if this your first child, you’re likely even more excited. You’ve probably spent months preparing your home for your baby, and you can’t wait to bring them home and begin your life as a family.
When it comes to a new addition to your family, there is another aspect that’s just as important to prepare: an estate plan.
Many people may believe that estate planning is only necessary for wealthy families with significant assets or seniors as they prepare for the future, but that’s not the case. Estate planning is for anyone and can greatly benefit new parents. Here are four reasons you may want an estate plan:
- Naming a guardian for your child. Thinking about what will happen if you or your spouse face an untimely death can be challenging, but it’s important to consider who you trust to raise your child if you are unable to anymore. Naming a guardian ensures that if something happens to you or your spouse, there is someone who can take your child in without causing a fight amongst your family or leaving it up to courts to decide.
- Creating a trust for your child. Your child may have just been born, but there are many things children will need later in life. If you die before they are 18, they will not receive any inheritance you leave behind. However, if you make a trust for your child, you can designate a trusted family member to manage the funds you leave behind in the trust for your child until they’re old enough to receive them.
- Naming beneficiaries. Any accounts or policies that you have in your name, such as a 401(k) will likely require the name of a beneficiary – the person who will inherit the assets after you die. You may want to add your child to some of these policies to ensure they receive what you want them to have in the future.
- Buying life insurance. Life insurance ensures that if you or your spouse passes away, the remaining spouse has the finances to continue raising your child alone. And if both you and your partner pass away, your child will be able to use the insurance to pay for college or other needs.
Having an estate plan in place after the birth of your child means that you are ready for whatever the future holds. It offers you and your family protection and gives you peace of mind that your child will be safe even after you die.
If you’re expecting a child, now is the time to review your will, create an estate plan and prepare for the future. A knowledgeable estate planning lawyer can help you make the necessary decisions for your family.