A new baby is good reason to review and update your estate plan

If you have become a parent for the first time, there are some things you should be thinking about for your estate plan. Whether you are looking to update your will or trust, or just looking to protect your newborn baby if you pass away, there are some important things to know and understand when doing so. Selecting a guardian, life insurance policy, knowing your new financial and emotional responsibilities, and hiring a professional estate planner are all important to keep in mind. Here is some advice to help.


Do recognize the importance of your new responsibilities

Whether you have a newborn or adopt an older child, or perhaps even become a step-parent, you have moved from a lifestyle that has been centered primarily on you (and your spouse or significant other) to one essentially focused on your child. That will not change. You are now the one who has to nurture, feed, clothe, care for, educate and serve the many other needs of your child. It’s an enormous responsibility that requires effort to develop a plan in case something happens to you. The first step to proper planning is to recognize that you need it.

Do name a guardian for your child in the event of your death

Although the state must determine if your selection is in the best interest of your child and approve your choice of guardian, you can nonetheless put in writing who you would like to do the job. If you are married, it will normally be your spouse. If you are not married, however (or perhaps live in a state where your marriage is not recognized), or if you and your spouse were to perish in a common disaster, it is important to express your wishes. Guardians nominated are often siblings, parents, other relatives or close friends.

Do look into life insurance

Having children means expenses. Private schools, camps, college, cars, etc. Before your child graduates from college it will take a lot of money to pay all of those expenses. If you die before then, where will that money come from? Unless you have independent wealth, life insurance is the easiest way to fund those obligations. If one parent dies and the other is a significant breadwinner, perhaps less insurance is needed. If the sole breadwinner-parent dies, however, much more will be needed.

Do look into disability income insurance

Most people think of life insurance first, but they don’t realize that a relatively young person is statistically more likely to suffer a disability (temporary or permanent) during his/her working lifetime than to die during that period. Nevertheless, many people fail to purchase insurance that will provide an income source while disabled. It is generally more expensive than life insurance and might be somewhat more difficult to collect. (Face it; it’s fairly easy to tell if you are dead, but opinions can differ on whether you are “disabled”). Disability income insurance coverage is probably more essential than life insurance.

Do create a trust

Your estate plan should include a trust to provide for your child’s maintenance and well being through the early and educational years and further into his/her lifetime. Name a carefully selected trustee (this selection is not unlike the selection of a guardian.) The trust will also function for these purposes when you are incapacitated.


Do not trust that things will work themselves out in the best interest of your child

If you die, things will happen that affect your child’s future, but they may not be the same things you would want to happen. You have the ability to make a plan and you should not shirk your duty.

Do not underestimate the cost involved of raising a child

When doing your financial and insurance planning, don’t make a guess at what it will take without careful research. It may be more than you think. Perhaps a consultant is appropriate to help you arrive at an accurate estimate.

Do not involve people in your plan without their knowledge and consent

When naming guardians, trustees, healthcare representatives and the like, first explain to them what you intend to do and make sure they understand the responsibilities involved and express a willingness to serve in the capacity you want. A relative or friend may, for example, not be comfortable making end-of-life medical care decisions for you. Surprises in this area are not a good thing.

Do not put off your planning

Although its easy to say you will do it soon, the years will go by quickly. Estate planning is often a difficult topic to deal with, especially when you are young and busy with a career and kids, but you should not delay getting your house in order just in case the worst happens. Estate planning is like insurance; you pay money for protection and comfort, but hope you won’t need it. You owe it to your child.

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These are a few general do’s and don’ts for a new parent to consider, but certainly not a complete list. Consult with experienced professionals for guidance in how to make the best plan possible. It’s just too important to get wrong.

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Lawrence M. PlouchaShareholder

Practicing for over 30 years in South Florida. Masters degree in Taxation. Listed in “The Best Lawyers in America”...

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