Estate planning can be a difficult and intimidating subject. Because of its obscurity, many families may fall into the trap of thinking that estate planning can only benefit particularly wealthy families.
However, in reality, estate planning encompasses a wide variety of end-of-life planning decisions. If you are a new parent, an estate plan can help you create contingency plans and set up a secure future for your child no matter what happens.
Estate planning areas of focus
If you’re a new parent, preparation and security are likely very important to you. Preparing yourself for anything they baby may throw your way (literally and figuratively) and your family’s future security are areas many new parents emphasize. Likewise, a tailored estate planning can help you address some of the more nuanced details of your child’s care if anything were to happen to you.
Here are six aspects of an estate plan, parents can focus on to create a secure future for their child:
- Naming an estate executor – When you pass away, someone will need to take control of carrying out the wishes stated in your will. The chosen executor will also be the person to represent you during the probate process and handle any legal or financial obligations of your estate.
- Naming a guardian – Raising a child is a big responsibility. By naming a guardian for your child, you can decide who exactly you want to raise your child if something unthinkable were to happen.
- Creating trusts – Placing your assets in trust accounts for your beneficiaries (child, wife, etc.) can help you pass on your assets to the next generation, set rules for how assets can be used and lower associated taxes when those assets get passed down.
- Identifying beneficiaries – Who would you like to receive which assets? And how much? Your beneficiaries and the amount they each receive will likely change multiple times throughout your life.
- Establishing powers of attorney: There are two kinds of ‘power of attorney’: medical and durable.
- A medical power of attorney would be in charge of making all medical decisions if you were incapable of doing so.
- A durable power of attorney would handle all other needs and communications like paying bills, making financial transfers and interacting with their place of employment.
- Setting up funeral arrangements: This step may seem grim, especially for a young and new parent, and while you aren’t necessarily picking our a burial plot or where to store your ashes, bypassing this step would leave all decision regarding your burial/cremation and funeral arrangements to your legal next of kin. This step may not be an immediate need, but if your afterlife decisions are important to you, it’s important to prioritize.
These topics and discussions can be difficult to sort out, especially when the legal and financial tools seem foreign. However, getting an estate plan sorted can help provide stability for your family’s future, no matter what happens.
As you welcome a new member to your family, consider taking a few hours to craft craft an estate plan with a professional. A qualified estate planning attorney can help guide you through these discussions and address your specific concerns.