You probably already realize that a new baby changes everything: new sleep schedule, new morning routines and new priorities.
As a new parent, estate planning likely isn’t at the top of your list while you’re adjusting to feedings, diapers and sleepless nights. But becoming a parent is one of the most important reasons to create or update an estate plan.
Why having a baby changes your estate planning needs
When you’re starting a new family, the last thing you want to consider is what would happen to your child if you weren’t around. It’s not an easy question to think about or answer. But once you become a parent, you have another person depending on you financially and emotionally.
Your estate plan may need to address more than who receives your property. You may need to make arrangements for your child’s care, financial support and inheritance. Even if you already have an estate plan, don’t assume it automatically accounts for your new child. Review your existing documents and beneficiary designations to determine whether they still reflect your wishes.
One of the most important decisions new parents can make is choosing who they would want to care for their child if both parents were unable to do so. Think beyond who loves your child. Consider whether the person is willing and able to take on the responsibility, where they live, their relationship with your child, their parenting philosophy and whether they can provide the stability your child needs. You may also want to name an alternate choice in case your first choice can’t serve.
You will also need to decide who will manage your child’s money or property until they are old enough to manage it. Some parents use a trust as part of an estate plan because it can provide instructions for how assets should be managed or distributed for a child’s benefit.
New parents spend months preparing for a baby’s arrival, and they don’t want to think about the possibility of becoming seriously ill or dying while their child is young. But creating an estate plan isn’t about expecting the worst. It’s about making sure your new child is protected if life doesn’t go as planned.