New parents have a lot of responsibilities to handle and estate planning may be the furthest thing from their minds. However, the creation of a family is precisely the time when planning for the future should be paramount, and new parents should take the time to plan their estates.
The first step is to execute a will and possibly a trust. It is important to specify how you want your assets distributed. Although you may be planning to leave everything to your children anyway, what if you were to die before they reach the age of majority? Without a will, your assets would be transferred to their children when they turn 18. Many people wish to create a trust that provides that money be managed on behalf of their children, with certain amounts becoming available at certain ages. This can be essential to protecting young people from themselves and ensuring that they do not manage funds irresponsibly or squander their inheritance.
Another important consideration for new parents is to designate who they would want to be the legal guardian of their children in the event of the parents’ death before the children reach adulthood. Making your wishes clear can avoid a potential dispute over guardianship, with a judge making the decision of who will care for your children.
Life insurance is another basic consideration for new parents, and it is most important when children are young and the financial burden of supporting them is greatest. New parents should consult with an estate planning attorney to determine how life insurance fits into their overall estate plan.
First-time parents certainly have their hands full and may not want to face the unpleasant task of imagining what would happen to their children if they were gone. However, one of the responsibilities of parenthood is protecting children in such a circumstance, and proper estate planning can do just that.