The nursery is ready, you’re all stocked up on diapers and you’ve mailed your baby shower thank-you notes. Now it’s time to check another essential off your to-do list. While caring for a child brings countless moments of joy, it also comes with an enormous amount of responsibility. For instance, parents will need to begin contemplating how to provide for their child in the event of a tragedy.
Estate planning is one of the best ways to preserve your assets for your child and to ensure an appropriate guardian will get custody of your child. Although it can be rather difficult to think about not being around for your children, carefully providing for their futures can play a big role in ensuring their well-being.
By creating an estate plan, you can designate a person to act as your child’s guardian in the event you are no longer around, and can also preserve assets for your child’s use. Although estate plans can change over time because of divorce and other family matters, new parents should consider at least having certain documents drawn up in their initial estate plan.
Have a will
The main reason new parents should have a will is to name legal guardians for their children. If you and your partner pass away, these are the people who would raise your children. Your will is the only place you can make this decision, so it is essential even if you have no money to pass along.
A will can also handle financial logistics, including financial guardians for your children. They oversee any money that’s left behind for your kids – including life insurance proceeds. People often name the same guardian for both legal and financial guardianship, but you can choose to not do it that way.
While your will ensures the care of your children physically and emotionally, life insurance makes sure that they’re cared for financially. So, you’ll want to get a life insurance policy.
Designate a health care power of attorney
A health care power of attorney, also known as health care proxy, allows someone you appoint to make medical decisions on your behalf if you can no longer do so. This is often a spouse or partner, but could also be family members or friends. Simply put, you will choose someone you trust to make these decisions. You should notify the health care proxy that you chose them, and talk to them about your wishes.
Designating beneficiaries to your accounts is important because they have priority over what your will says. The people you designate to certain accounts would inherit the money within the account they are beneficiary of. Common accounts that use beneficiary designations include checking and savings accounts, retirement and investment accounts and life insurance.
As a new parent, you’ll want to prepare for the future of your children in the event you pass away. Of course, it’s a morbid topic, but doing it right is a great gift to your family after you’re gone.