Becoming a parent changes virtually everything—including your responsibilities when it comes to planning for the future. Whether you have just welcomed your first child or added to your growing family, now is the time to draft or update your estate plan.
While it is natural to be focused on diapers, doctor visits and daily routines in the early days of your child’s life, taking the time to create legal protections that your child may need in the future is one of the most important steps you can take as a parent without delay.
What’s the rush?
Estate planning can help you to better ensure that your child will be cared for if something unexpected happens to you. A will allows you to name a guardian for your child, rather than leaving that decision up to a judge. Without this document in place, there could be confusion or disagreement among family members about who should step in to raise your child.
Beyond guardianship, your estate plan can (and should) address your financial assets. You may want to create a trust to manage any money or property left to your child. Trusts can provide more control over how and when assets are used, which can be especially helpful if your child is still young. A trust can also help to ensure that any inheritance is managed by a trusted adult until your child reaches a responsible age.
Healthcare and financial powers of attorney are additional tools that should be included in your plan. If both parents become incapacitated, these documents can help someone you trust make important decisions on your behalf. Naming alternate agents and outlining your wishes now can help to ensure that your care is approached according to your preferences if you ever can’t advocate on behalf of your interests.
If you already have an estate plan, now is the time to review and update it. Adding a child to your family means that your current documents may no longer reflect your wishes. Beneficiary designations on retirement accounts, life insurance policies and other financial instruments should also be reviewed to ensure that they align with your updated plan.
Estate planning is not a one-time task—it should evolve as your family does. The birth or adoption of a child is one of the clearest signs that it is time to act with an eye toward the future.