Diapers, bottles, and sleep schedules can be overwhelming for new parents, but the birth of a child also underscores the need to protect their bundle of joy through estate planning. According to a recent article from The Street, “New parents face overlooked estate planning risks,” a new family needs an estate plan for protection.
People tend to do estate planning two times in their lives—when a child is born and when they are preparing to retire. There’s a big gap between those periods when estate plans should be reviewed and revised, but that’s a topic for another blog post.
The fact is, once you have a child, you have a dependent, someone who needs you for everything. In most cases, parents will be present for their children’s lives. But what if something happens and they are not?
This is where estate planning becomes especially important.
The estate plan begins with a will, which includes naming a guardian to step in if the parents are both dead. This is not easy to contemplate, but necessary. For some families, it’s an easy decision—a sibling with children who lives nearby. In other cases, it’s a difficult decision, but in this case, it’s even more important for you to name your children’s guardian. Otherwise, a court will make the decision for you.
In some states, you can also use an additional document to name a temporary guardian in case you are disabled for a period of time. This prevents all kinds of headaches if parents are injured or incapacitated.
Next, who will manage the money for the children if both parents are dead? One option is to include a provision in the will naming a trustee to manage funds for the children. If there are additional assets, such as a home or a large inheritance, a separate trust may be needed to specify when the children receive the money and to set conditions for its use.
Once you have a child, you need to have life insurance. Buying term insurance when parents are young and healthy can be inexpensive and provide financial security for both parents and their children.
Estate planning documents every parent should have, including a durable power of attorney, a health care proxy, and a living will. Parents who don’t take care of estate planning leave their children vulnerable to decisions being made by a court and strangers. Grandparents and siblings may not agree with the court, but unless they are prepared to enter a court battle, they won’t have control over what happens to your children.
Sit down with an estate planning attorney before or shortly after welcoming a child to the family. It’s just as important as not running out of diapers.
Legacy One Law Firm, APLC is an estate planning and probate administration law firm in Los Angeles, California, serving families throughout the State. We help individuals and families establish living trusts, wills, powers of attorney, advance healthcare directives, and other essential estate planning documents designed to protect their loved ones and preserve their legacy. Schedule a quick and easy consultation with estate planning attorney Sedric E. Collins, Esq., or call 323-900-5450.
