Estate Planning Basics For New Parents
New parents have a lot on their mind. Adjusting to your new life as a family of three or four takes time. There are diapers to change, napping schedules to figure out, tummy time exercises and sleepless nights. Many parents assume that finding a pediatrician and suitable nanny or daycare is most of the work. But once your child has arrived, it is crucial you think about life insurance and estate planning. Your child is wholly dependent on you. And while none of us can predict the future, it will give you peace of mind to know your child will be taken care of should something happen to you. What does estate planning look like for new parents?
Drafting a Will and Designating a Guardian
Now that your family is growing, it is time to consider drafting a will. A will is a legal document drafted to state your final wishes regarding personal property, real property, intellectual property and financial assets. A will indicates how you want property to be distributed upon your death and also contains provisions regarding your child’s care after your passing. If you have minor children, it is crucial that you include provisions regarding guardianship in your will. Give some thought as to who you would want to care for your children in your absence. Maybe it is a sibling, aunt or close friend. Perhaps you have important concerns regarding your child’s education and religious upbringing. Or your child may have a medical issue that requires the designation of special instructions for a potential guardian. You can draft a will to contain these provisions and also draft additional guardianship documents should you desire.
Setting up a Trust & Life Insurance Account
Once your family of two becomes a family of three or more, it’s time to seriously consider purchasing a life insurance policy. While it can be awkward or difficult to think about your own passing, especially if you are young and healthy, there is no better time to apply. That’s because rates increase as you get older. You won’t get a more affordable rate than what you are eligible for today. However, one small caveat to keep in mind is to never name your minor child as a beneficiary. Minor children do not have the capacity to act as a financial custodian or manage their own trust or life insurance annuity account. This is why it might be prudent to consider opening a testamentary or revocable trust. Doing so gives you control in choosing and appointing a trustee, while still granting you access to your funds should you need liquidity. Even if you have already designated a guardian, you may also want to consider designating a trustee as well. You can design the trust so that your child is the beneficiary of any assets linked to it, including life insurance or survivorship benefits, and also control how often and in what quantity payments can be made to the child’s custodial account.
Contact the Estate Planning Attorneys of Strategic Counsel Law Group, L.C.
Parenting is hard. Tackling the unknown is difficult, but providing for your child in your absence takes planning and strategy. Take the first step in securing your child’s future and call our Tampa estate planning attorneys at Strategic Counsel Law Group, L.C. Reach out to us today for help.