Estate Planning for New Parents
March 3, 2020
Throughout a person’s adult life, many major life events occur. This includes marriages, starting a business, the birth of a child, receiving an inheritance, entering retirement or being diagnosed with an illness. And with each of these events, it may be beneficial to consider any measures one could take when it comes to his or her estate plan. Take having a child, for an example. Expanding a family, whether it is through childbirth or adoption, is an exciting time. It is also an instance where parents should take the time to consider how best to protect the child if anything was to happen now or in the future to either or both parents.
Estate Planning Steps for Parents
Prior to welcoming a child into a family, spouses are likely to leave their assets to each other in the event of his or her death. However, when a child comes into the picture, this can give rise to new thoughts on how to address the treatment of assets. When it comes to establishing an estate plan that focuses on the benefits for a child, there are three steps to consider.
Three Steps Parents Should Take
First, parents should purchase life insurance independently. This way, in the event of his or her death, the child could receive the finances needed to ensure they are cared for and to establish a college fund. This, of course, is necessary no matter a person’s job, income or even if they are a stay-at-home parent.
Next, a will should be drafted. This allows parents to specify what will pass onto the child in the event of their death. And, in the event that both parents pass before the child turns 18, naming an individual to manage the assets, property or even business until the child reaches the age of majority. Finally, a guardian should be named. This person would assume all responsibilities of the child in the event that both parents die.
The estate planning process can feel overwhelming an complex, as it often requires to think about difficult issues and topics, such as death. However, when it comes to ensuring the financial security and wellbeing of a new baby, it is important to consider how the estate planning process could benefit new and seasoned parents.