Becoming a new parent is a life changing experience, and caring for a child is an awesome responsibility as well as a joy. This is also the time to think about your child's future by asking an important question: who will care for your child if you become disabled or die? The best way to put your mind at ease is by having an estate plan.
The most basic estate planning tool is a Will, which enables you to determine how your assets will be distributed after death. Without this important estate planning tool, the state's intestacy laws will govern how your assets will be distributed. In addition, decisions about who will care for your minor children will be made by the court. For this reason, it is crucial for new parents to have a Will and to designate who you want as guardian for your minor children.
In this regard, selecting guardians involves a number of important considerations. Obviously, it is important to name individuals who are emotionally and financially capable of raising a child. At the same time, a Will can also establish a trust that provides funds to be used to provide for the child's needs. Ultimately, guardians should share the same moral and spiritual values, as well as childrearing philosophy of the parents.
In addition to naming guardians in your Will or separate designation of guardian document, it is also critical to plan for the possibility of incapacity by creating powers of attorney and advance medical directives. A durable power of attorney allows a new parent to name a spouse, or other trusted relative or friend, to handle financial affairs. Further, a medical power of attorney designates a trusted person to make medical decisions in accordance with the parent's preferences.
Finally, new parents should also obtain adequate life insurance to protect the family. The proceeds from an insurance policy can replace lost income, pay household and living expenses, as well as any debts that may have been owed by the deceased parent. It is also important to ensure that beneficiary designations on any retirement accounts are up to date so that these assets can be transferred expediently.
In the end, having a child is a time of joy, but also one that requires careful planning. The best way to protect your family is by consulting with an experienced estate planning attorney who can help you navigate the process.