Becoming a new parent can be equally exciting and stressful. New parents have a lot of planning as they prepare to welcome a new member of their family. They may need to set up a nursery, take infant care courses and start preparing for child care when the mother eventually returns to work after the birth.
Parents also need to think about the legal and financial protection of their new child. For many adults, the addition of a baby to the family is a powerful reminder that they should put together an estate plan. All new parents could give themselves greater peace of mind and their new child better protection by crafting a thorough estate plan.
Minor children are very vulnerable
Parents provide their children with support in the form of education and guidance. They set the family’s routines and household rules that teach children how to safely meet their daily needs. Parents also have a responsibility to provide for a child’s basic economic needs.
If anything happens to the parents of a child, the child could end up in foster care or living in state facilities. For many new parents, the most pressing matter when estate planning for the well-being of their child is the choice of the guardian who would assume a parental role.
The vulnerability of an inheritance is also something parents may want to address. The creation of a trust could earmark certain resources for a child’s use later in life to prevent a scenario in which a guardian or surviving parent burns through everything that a child inherits before they turn 18.
New parents may also need to consider a scenario in which they become incapacitated but do not die. Someone’s long-term hospitalization might leave them unable to handle their financial responsibilities or make medical choices on their own behalf. Therefore, someone may need to draft living documents such as powers of attorney.
Those documents can give someone else the authority to make medical choices or manage their financial affairs. Powers of attorney could protect children from a scenario in which they face eviction from a rental home or the loss of other crucial family resources because their parents cannot handle household matters. Parents may also need to consider what resources could be vulnerable after their death. Carrying enough life insurance to pay off a mortgage and cover student loans can be important if new parents hope to leave their children a legacy of support instead of debt.
Making the decision to create an estate plan can help parents feel more confident about the future of their new child, regardless of what may happen in life.