17 Oct Estate Planning for New Parents
Birthing or adopting a child is one of the most exciting things you will ever experience. And there is so much to do to prepare for their arrival. So, now that you have decided on the theme and colors for your new baby’s nursery, it’s time to plan for their longer range future. Specifically, how you will provide for them if you are no longer alive or able to work. Phelps LaClair, serving the Phoenix metro area, offers these estate planning tips for new parents—whether you’re setting up an estate or updating an existing estate plan.
Living Will and Power of Attorney
A Living Will is an essential piece of your estate plan because it spells out your medical decisions for incapacitation and end of life. If your doctor has determined you are incapable of making decisions—a living will allows your family and physicians to rest assured that your own choices are being respected. By creating a living will and designating a medical power of attorney to make decisions for you, you free your loved ones from the unbearable burden of wondering if they are doing “the right thing” regarding your care.
A financial power of attorney allows you to name someone to make financial decisions for you if you are unable to do so yourself. This designee will have the authority to access your funds so that your children’s needs can be met. It is an important part of an estate plan that ensures the well-being of your children, should something happen to you.
Guardians and Trustees
If you are no longer able to parent, who will raise your children? They will need to have someone who has their best interest in mind. With a revocable living trust, you can name a guardian who will be responsible for decisions regarding their schooling, relationships, health and daily life concerns. Choose wisely and always ask your potential in loco parentis if they are willing. It can be a tremendous burden as well as a great joy.
On the financial side of a revocable living trust, you may also name a trustee who will pay the bills, file taxes, and distribute the assets of the estate according to your wishes. While a legal guardian is required until the child is 18, a trustee can be in charge of your estate until he or she feels that the child is fiscally mature and responsible. It is also wise to name an alternate trustee in case something happens to your first choice.
Life Insurance
Having adequate life insurance is critical for young families. If you die at a young age, life insurance can pay off your mortgage, provide for daily living expenses, and establish a fund for education. Two factors come into play when considering how much insurance to buy.
- How much will your family need?
- How long will they need it?
The answers to these two questions will determine the kind and cost of insurance you need. Some families will need term insurance; others will want a whole life insurance plan.
Updating your estate plan
Because life changes happen often, you need to keep your estate plan current. We advise our clients to review their plans at least every three years. As your family expands, you will want to update your plan for new arrivals, and later on, for departures.
Phelps LaClair has been designing estate plans for 40 years. As a second generation firm, we have helped thousands of families like yours get started on a solid foundation. These estate planning tips for new parents are based on our extensive experience. Come see us for a free first consultation. We can discuss your needs and goals and design an estate plan for you that will bring you peace of mind knowing that your family will be taken care of if you are no longer able to do so yourself. That is worth its weight in gold!
Images used under creative commons license (Commerical Use) 10/17/2019 Photo by Samantha Hurley from Burst