Making the decision to start a family is a big one. As you plan the nursery and purchase all the “must haves” for your little bundle of joy, you should also set up an estate plan that has your child’s future in mind. Estate planning helps to ensure that your child will be cared for if something happens to you before he or she is an adult.
Setting up your estate plan doesn’t have to be difficult. Keep the focus on providing for your children, and you might find that decisions will seem easier. Here are some points to remember when you establish your estate plan:
Who will take care of my minor children?
Decide who will raise your children if you no longer able to do so. The person or people you consider for this should be someone:
- Whom you trust completely
- Who is financially and emotionally able to care for your child
- Whom your child will feel comfortable
Initially, it may be tempting to choose someone older than you, such as your parents. However, it can make more sense to find someone closer to your age so that he or she can be around long term for your child. At the very least, revise your choice of guardian as your parents age.
Who will take care of my assets?
In your estate planning documents, you will appoint an executor who will oversee the administration of your estate. Your executor does not need to be the same person you chose as the guardian of your children. Just make sure that you speak to those you appoint to make sure that they are willing to serve. This will also let the person know that he or she will be contacted if something does happen to you.
How will money and assets transfer to my child?
You can choose when and how your child will receive the assets from your estate. If your child is still a minor, assets must be held until he or she becomes an adult. You can also delay the transfer of money and assets until your child is older with the help of a trust. There are different types of trusts for you to consider that may suit your various needs and desires for those left behind.
You will need to designate the beneficiaries on your investments, such as 401(k) and life insurance policies. You may choose to make your trust the beneficiary or make money immediately available to certain family members to provide support to the family until the probate process is complete.
Don’t leave your child’s future to chance
As difficult as it is to think about not being around for your child, it is vital to have everything in place to take care of them if the unthinkable should happen. Estate planning for young families is a step in the right direction for all new parents.