Becoming a parent is an incredible milestone. You’re happy about your child and ready to bring them home and start a life together as a family. You’ve spent months preparing for this – buying baby clothes and toys, and even baby-proofing the house. You’re excited to watch them grow up.
All of this is normal for new parents. However, there is one crucial step that many new parents might not think about when it comes to preparing for an addition to their family: estate planning.
Estate planning is for all ages
You might wonder why you need an estate plan as a new parent, and you wouldn’t be alone. Many people believe estate planning is something for later in life or only for people with substantial assets. But that’s not the case. Estate planning is for everyone, and new parents should especially consider creating one as soon as possible.
Here’s why. An estate plan offers protection for you and your family in the event of an unexpected accident or illness. With an estate plan, you can ensure your child will have someone to look after them as well as funds to support them.
The following are some steps you should take to start building your estate plan:
- Create a will – You might already have a will, and after the birth of a child is a great time to update it. Make sure you add your new child into your will and review any terms you originally included to guarantee they’re still appropriate.
- Name a guardian – In the worst-case scenario, if both you and your child’s other parent pass away when your child is still a minor, a guardian can step in to take care of them. Naming a close friend or family member as your child’s guardian ensures that your child will not be alone and protects your child in the event of a sudden accident.
- Set up a trust – A trust allows you to set aside money or assets for your child that they can access when they’re older. You can assign a family member as the trustee – someone who can manage the money for your child until they’re old enough to use it themselves.
- Name beneficiaries – Now is an excellent time to review the beneficiaries of your life insurance and retirement accounts. You will want to coordinate the beneficiary designations with your estate plan. If your assets are distributed in trust for your new child, then you will want the life insurance and retirement accounts to flow into the same trust.
Estate planning is a necessary step for everyone to take – no matter their age or how many assets they have. New parents should consider creating or updating their estate plans soon after their child is born. It offers you peace of mind for any unexpected situations in the future.