When you are expecting a child, you know your life is about to face a major adjustment. You’ve been preparing for months: setting up a crib and nursery, reading books about caring for a newborn and stocking up on essential baby supplies. But there’s another important preparation you and your spouse shouldn’t neglect as you become new parents: establishing an estate plan to provide for your child in case the unexpected happens.
No one likes to think about if they were to pass away suddenly. Or if a tragic accident took their life and that of their spouse, leaving behind their young child. However, when you become a parent you need to prepare for these “what-ifs.” With proper estate planning, you can:
- Name a guardian for your child. You can choose someone who would raise your child as you would. Without a will that names a guardian for your child, the court will decide who will raise your child until your child is 18.
- Set up a trust of your assets for your child. You know raising a child is expensive. Through estate planning, you can designate that your assets will go into a trust to provide for your child until your child reaches age 18. You also can establish how your child will receive what assets are left from that trust after they are 18.
- Choose someone to serve as the trust’s manager and executor of your estate to distribute and handle your assets properly.
- Create an advance care directive and name a health care power of attorney. If you become incapacitated before your child is 18, you can state what your health care wishes are and name someone to make decisions about your future care.
- Name a financial power of attorney. Again, if you become incapacitated and can’t make decisions on how to handle your financial assets for yourself or your child, your named financial power of attorney will do that for you.
Taking the time to plan for the future is important. Even if you don’t pass away before your child reaches age 18, you want to know you did your best to provide for them with your assets. You want to know your child will be well cared for and you have people named who can handle your finances and health care decisions if you become incapacitated.