Becoming a parent for the first time is an exciting and life-changing experience. As a new parent, you are welcoming a new member to your family, but also welcoming many new responsibilities that come along with parenthood, including planning for the future.
Though it is difficult to imagine your child’s life without you in it, developing an estate plan will help protect your child and provide for them in the event of unforeseen circumstances.
1. Protecting your child’s future
In the event of your unexpected illness or death, having an estate plan will ensure that your child’s legal and financial care will be in accordance with your wishes. Many clients report that including their wishes in their estate plan provides peace of mind, knowing that their child will have the best possible financial and legal care in the future.
2. Naming a guardian
One of the most critical aspects of estate planning is naming the guardian who will take care of your child in the event of your untimely illness or death. It is important to note that without a designated guardian, the court will decide who will care for your child; a costly process which often pits extended family members against each other and incentivizes testifying as to family members’ worst habits. Naming a guardian in your estate plan ensures that a trusted person who shares your values and beliefs will care for your child as if they were their own.
3. Creating a will and trust
As a new parent, creating a will that directs your assets to your child after your death is essential. If you do not have a will, the probate court will distribute your assets according to state law, which may not align with your wishes. Furthermore, the lack of a will may likely open your estate up to litigation, and, unfortunately, oftentimes frivolous lawsuits completely deplete the estate leaving nothing for those you intended your assets to go to.
In addition to a will, you can also consider establishing a trust. A trust can provide several benefits to your child including protecting their inheritance from creditors, divorce, or even your child if they have issues handling money or themselves become incapacitated. A trust can also ensure that your child’s inheritance may grow over time while providing for specific needs like education and health. A Trust may also direct that at some point the inheritance is distributed outright at a specific time, like when your child graduates from college, or at a specific age, like twenty-five or thirty.
The important thing to remember is that we cannot plan for all of life’s uncertainties, but that developing an estate plan early and updating the documents as your child’s needs change will certainly help you care for them no matter the circumstances.