When you are a new or expecting parent,your first thoughts may not be your estate plan. However, your estate should be one of the most important considerations as soon as you have a new baby on the way.
When you start your family or add to it, you need to ensure your estate is set so you do not have to worry should something happen to either of you. Take these steps regarding your estate when you have a new baby.
Create a Will
If you have not already done so, you need to create a will. A will is a tool that distributes your assets. The will also denotes who you wish to take guardianship of your children should both parents pass away. If you do not include a guardian in your will, the state of Indiana will find a guardian.
Your will also states the name of the executor of your estate. The executor will ensure your assets go where you wish but also is in charge of dealing with your creditors, taxes, and other tasks associated with your estate. You should only choose someone you trust to fulfill this duty.
Change Your Beneficiaries
Check your retirement plans, insurance policies, and any other plans which may include beneficiaries. Update the beneficiaries to include your new child. You should do this for each child you have.
For example, if you have two children who you want to receive 50 percent each of your benefits, and you subsequently have a third child, that child will not receive anything unless you change the beneficiary to 33 percent.
Buy Life Insurance
If you do not have life insurance, the birth of a baby is the perfect time to get it. Life insurance is guaranteed funds to help your family out financially in the event of your death. Life insurance can be helpful in making sure your debts are paid, such as your mortgage, so your beneficiaries can inherit the rest of your estate.
When you set up your life insurance, consider setting up one for your children’s needs and healthcare, and a second policy to take care of any outstanding debt and the cost of probate.
Start a Trust for Your Family
Even if you do not have high-value assets, you should set up a family trust to ensure your children are taken care of in the event of your death. The trust will ensure the assets you leave to your minor children are safe.
If, for instance, both parents pass away and you want to ensure your estate cares for your children, you can start a trust the children’s guardian can use to care for them. You have different trusts to choose from, but they all have certain restrictions based on your circumstances and preferences.
Set Up Limited Power of Attorney for Care Providers
This step is not only important in the event of your death but even if you leave your children in another person’s care temporarily. You should set up a limited healthcare power of attorney for your children, which allows the caregiver to make decisions on basic healthcare needs in the event your child needs care while you are away.
Start a College Savings Plan
The birth of a child is the perfect time to establish a college savings plan. College is expensive, so you should start your savings plan right away to ensure you have enough funds to send your children to college. You can choose a 529 Savings Plan or other forms of college savings plans.
If you have any additional questions about your estate plan, please contact us at The Law Office of Travis Van Winkle LLC.