Estate Planning and a New Baby: Updates You Need to Make

When you are expecting a baby for the first time, you may not think about how a new child will impact your estate plan. As you plan for your new baby, you also need to consider the status of your estate plan and think about the changes you need to make once your little one is born.

Any time major life changes occur, especially the birth of a child, you need to check on your estate plan and make the necessary changes to ensure your entire family is cared for in the event of your death. The following are some things you need to do when you have a baby.

Create or Update Your Will
Ideally, you should already have a will written up. A will is a tool your executor uses to distribute your assets as you see fit once you pass away.
 You also include who will care for your children if they are still minors when you are gone.

The will lists the name of the executor of your estate. This person is tasked with dealing with your assets, creditors, taxes, and any other business regarding your estate. He or she should be a trusted person you know will follow your wishes.

If you do not have a will or update your will after having a baby, you risk the guardianship of your child and your assets not going to your children upon your death.

Make Changes to Your Beneficiaries
When you have a baby, you need to update your beneficiaries on your important accounts and plans. This includes insurance policies, retirement plans, and other accounts. Each time you have a child, you should visit your human resources department to add them to your beneficiaries.

If you have one child who you want to receive 100 percent of your benefits upon your death, but you later have a second child, you need to update the percentage breakdown on your accounts. Otherwise, one child will not receive benefits after you are gone.

Create a Savings Plan for College
When you have a new child, you should establish a college savings fund. College tuition is costly, and it can take many years to save up for a full ride for college. There are a variety of college savings plans available. You should speak to your attorney to see which option is best for you and your child's needs.

Create a Family Trust
Most may believe a trust is meant for families with a high net worth. This is not always the case. A family trust is a helpful estate planning tool that will make sure your children are cared for if you pass away. The family trust safeguards your assets for your minor children.

If both children's parents pass away, your family trust will name a guardian to care for the kids and manage their assets. You have different options to pick from. Be sure to discuss your options with your family law attorney to decide which option best meets your needs.

Create a Limited Healthcare Power of Attorney for Childcare Providers
A limited healthcare power of attorney allows guardians of your children to make healthcare choices for your children in the event you are unable to do so. This is a useful tool to have in place even if you do not pass away.

For example, if you go on an adults-only trip and leave your children in the care of a guardian, the guardian should have a limited healthcare power of attorney in the event the child needs medical care.

This is also a good tool to have in place in the event you become incapacitated and cannot make medical decisions for your child yourself.

If you have any additional questions about estate planning, please contact us at the Law Office of Carla D. Allen.