Part of the joy of adding a new baby to the family is thinking about everything you intend to share with your child in the future. However, as difficult as it may be, you also have to think about and plan for a future in which you are not present in your child’s life.
Many people mistakenly believe that estate planning is only something for the elderly to think about. In fact, in the event of an unforeseen tragedy, your child’s welfare could depend on you creating an estate plan now. While the process can be complicated, here are some of the most important steps to take.
1. Name a guardian in your will
A guardian is someone who takes care of your child in the event that both you and the other parent die. If you do not name a guardian, a judge will have to appoint one. Your family members may argue about it in court, and you may prefer that someone outside your family raise your child. It is better for everyone if you make your wishes clear by naming a guardian in your will.
2. Consider a trust
Children cannot inherit money directly. Someone has to manage it for them until they come of age. Creating a trust allows you to decide who will be in charge of your child’s finances. It also allows you to control when your child receives the money and under what circumstances.
3. Update beneficiaries
Certain accounts, such as retirement savings or life insurance policies, require you to designate a beneficiary to inherit in the event of your death. As a new parent, you can update these accounts to name your child as a beneficiary.
Because life circumstances change, it is possible to revise most estate planning documents as needed. If you have more children in the future, you can update your estate plan as necessary to include them too.