After welcoming a new bundle of joy into the world, there’s a good chance that estate planning is one of the last things on your mind. However, establishing a plan for your assets after your death today is essential for helping your loved ones avoid lengthy probate proceedings and ensuring your child has the best care no matter what life throws your way. Here are a few estate planning tips for new parents looking for peace of mind:
Name a guardian in your will
Having a new child is an excellent reason to draw up a will. While most people assume wills are merely for handling the distribution of assets after they’re gone, they also allow you to name a guardian for your children if anything happens to you. Without one, the courts will decide who provides your child’s care.
Set up a trust account
Placing assets in a trust allows your heirs to skip the costs and delays of the probate process. Setting up a trust account in your child’s name before your death can reduce the amount they will have to pay in taxes. A trust can also provide benefits like appointing a trustee to manage money for your child even after reaching the age of majority.
Update beneficiary designations
When setting up a 401(k), IRA or life insurance policy, you generally must name a beneficiary. If you neglect to update these beneficiary designations periodically, you could inadvertently disinherit your child from a large portion of your assets – even if your will divides your assets equally among your children.
Make funeral arrangements
Even if you don’t have any specific wishes for your funeral arrangements, having them in place can help your relatives make difficult decisions in times of grief. Without outlining these plans, your next of kin will assume the responsibility of handling your memorial.
A solid estate plan is a must-have for new parents. By taking steps to plan for your child’s future today, you can ensure they will be cared for no matter what the future holds.