When you are expecting your first child, it’s natural to feel overwhelmed by the responsibility of raising a child. At first, you’ll likely focus on what you need to know about caring for a newborn before thinking about what other important items you need to deal with. However, one crucial task you don’t want to overlook is creating an estate plan, so you know your child will be cared for if you and your spouse were to unexpectedly pass away.
With the COVID-19 virus claiming many American lives this year, more couples are beginning to realize the importance of having an estate plan, especially when it comes to protecting their children. Here are some key aspects of estate planning you want to take care of when you are a new parent:
1. Create a will that names a guardian for your child.
You and your spouse need to decide who can be a legal guardian for your child in case something unexpected happens to both of you. Once you determine the best candidate, ask them if they are willing to be your child’s guardian. If they agree, make sure their name is included in the estate plan.
2. Set up a trust for your assets to care for your child.
If you or your spouse passes away, a trust can provide money to care for your child. The trust will include your assets and you will name a trustee to manage it. The trust also can lay out when your children will directly receive their inheritance to manage on their own. It doesn’t necessarily need to happen when they turn 18.
3. Set up a living will, health care proxy and power of attorney documents.
You want your wishes to be clear if you become incapacitated while your child is a minor. Your named health care proxy will make care decisions for you based on your living will and your power of attorney representative will handle your financial affairs.
4. Set up your account beneficiaries.
You want to ensure the trust you set up for your child receives your assets quickly and easily. You can name the trust as the beneficiary of any life insurance plans you have, any 529 accounts and your retirement accounts.
Having an established estate plan will give you and your spouse peace of mind about the future. An estate planning attorney can help you draft the documents you need for a legal, comprehensive estate plan. Then, you’ll know you’ve done your best to care for your child in any circumstance.