If you and your partner have recently welcomed your first child, the last thing you want to think about is who will care for your baby if you are no longer able to do so. By having a family conversation about estate planning, however, you can ease your mind while making sure emotional and financial support for your little one are in place in the event of an unthinkable tragedy.
These are the factors new parents should consider when creating an estate plan for the first time.
Create a will
The will is a legal document that indicates how the court will divide your property after death and who will care for your child if you and your partner die or become incapacitated. If you do not name a guardian for your child, the court will appoint a caregiver in your absence (usually, but not always, a family member).
In Colorado, your surviving spouse will receive your assets, which he or she can then use to provide for your child. If either of you has a child from a previous marriage, you may want to make provisions for him or her in your will, also.
Establish a trust
When you appoint a guardian for your child in the event of both parents’ death, you should also consider how this individual will provide financial support. Many parents create a trust for this purpose. The trust owns property and assets the guardian can use to care for your child. When he or she becomes an adult, you can arrange for the inheritance of the remaining funds. You can also name a trustee to control the funds and provide the guardian with a regular allowance for child support.
Although these are the basic estate planning components for new parents, you can take other steps to ensure the fulfillment of your wishes for your family. For example, you can purchase life insurance and create a power of attorney that allows your spouse or another family member to make medical decisions on your behalf.