Estate Planning for First-Time Parents
Nov. 24, 2020
Whether adopting or giving birth to a new baby, expectant parents put a lot of energy into preparing for their new love. In addition to setting up a nursery, buying diapers, taking birthing or parenting classes, moms and dads should take the opportunity to update or create an estate plan.
Making plans for what happens after a person dies may seem incongruous with making plans for welcoming a new baby but the two go hand in hand. An estate plan gives parents the ability to provide a structure and a framework for their children should the unforeseen happen.
Naming a Guardian for A New Baby
Parents should decide who will raise their child should they die prematurely. Making this decision requires careful assessment of potential guardians, including their emotional, physical and mental ability to take on this role. A family member may or may not make the ideal guardian. Moms and dads may want to consider close friends for this role.
Financial Responsibility for Raising a Child
Kiplinger notes that a trust may provide the financial stability needed to help a guardian raise a child. Parents might consider naming a person other than the guardian to act as the trustee.
Update Other Important Documents
New parents should update their life insurance policy to reflect the appropriate beneficiary once they establish the trust. Parents without these policies in place should establish them. Moms and dads should also ensure their retirement account beneficiaries properly reflect their new role as parents.
Power of Attorney Documents
Durable power of attorney and health care power of attorney documents adjunct a good estate plan, making these important for new parents to update or create.