Becoming a new parent is a life changing experience, and caring for a child is an awesome responsibility. This is also the time to think about your child’s future by asking an important question: who will care for your child if you become disabled or die? The best way to put your mind at ease is by having an estate plan.
The most basic estate planning tool is a will, which enables a person to determine how his or her assets will be distributed after death. Without this important estate planning tool, the state’s intestacy laws will govern how these assets will be distributed. In addition, the court will make the decisions about who will care for any minor children. Therefore, it is crucial for new parents to have a will or living trust naming guardians for minor children.
Selecting guardians involves a number of important considerations. Obviously, it is important to name individuals who are emotionally and financially capable of raising a child. At the same time, a trust also provides funds to be used to provide for the child’s support and education. Guardians should share the same moral values, and childrearing philosophy of the parents. In some instances, it may be appropriate to appoint a different person as guardian and as trustee overseeing the financial support of the child. Perhaps you have a family member that would do a fantastic job raising the child, but who is not very financially savvy or responsible.
In addition to naming guardians in a will or trust, it is also critical to plan for incapacity by creating powers of attorney and advance medical directives. A durable power of attorney allows a new parent to name a spouse, or other trusted relative or friend, to handle personal and financial affairs during a period in which you may be incapacitated. Further, a power of attorney for healthcare, or healthcare proxy, designates a trusted person to make medical decisions about minor children in accordance with the parent’s preferences.
New parents should also obtain adequate life insurance to protect the family. The proceeds from an insurance policy can replace lost income, pay household and living expenses, as well as any debts that may have been owed by the deceased parent. It is also important to ensure that beneficiary designations on any retirement accounts are up to date so that these assets can be transferred expediently.
Having a child is a time of joy, but also one that requires careful planning. The best way to protect your family is by consulting with an experienced estate planning attorney at Schneiders & Associates, who can help you navigate the process.
By: Roy Schneider, Esq.