Bringing a new child into the world means taking on a lot of responsibility. Children are expensive and require financial support. They also require 24-hour care and supervision. Those anticipating the birth of a child often have a very long list of tasks they must complete to be ready for the child’s birth.
For many families, estate planning should be on that list. Parents need to plan ahead to properly protect their new child from a very perilous situation if anything were to happen to the parents.
What documents do new parents need?
At the bare minimum, those expecting a child often require a will so that they can designate a guardian for their child. That way, they do not need to worry about their new child ending up in foster care or getting adopted by total strangers. Parents can also name their child as a beneficiary of their estate plan so that there will be resources to support them as they mature. Many parents will use a trust to achieve that goal instead of a will, as a trust can preserve assets so that guardians don’t use them all before the child turns 18.
Parents may also want to consider adding living documents to their estate plans. Powers of attorney might allow them to preserve certain assets if they have a medical emergency so that their children still have a stable life. They can also take pressure off of the extended family unit by leaving clear instructions about their medical wishes in an advanced directive.
It is also common for parents to purchase life insurance, but they will need to designate their child or the trust that they started as the beneficiary for those funds with the insurance company. Estate planning paperwork will not control what happens to life insurance proceeds in most cases.
New parents have a lot to worry about, and they may not want to focus on the biggest risks that their future could potentially hold. However, the sooner new parents address concerns like the possibility of a medical emergency or their early death, the more peace of mind they will have about the fact that they have done what they can to safeguard their child’s future.