Becoming parents for the first time is one of life’s biggest milestones, but it can be overwhelming. On top of the knowledge you need to know about caring for your child, there is plenty of financial information that you need to learn about as well.
As a new parent, there are several estate planning aspects that you need to carefully consider. The reason? Estate planning when your child is younger will help ensure a more secure future for the entire family.
Why does estate planning need to be done so early in a child’s life?
You never know what tomorrow will bring, and you do not want to leave any stone unturned when it comes to the care of your child if you are unable. Deciding early about certain estate planning aspects, like possible guardians of your child and how they will be taken care of financially, can give you peace of mind.
Financial planning is not only important in the case of your untimely death or illness, but for the entirety of your time as a parent. Ensuring that you are doing everything you can to keep your child happy, safe and healthy is what parenthood is all about. And much of that entails managing your long-term finances.
5 estate planning topics that need to be considered by new parents
When it comes to estate planning, there are quite a few bases that need to be covered to protect the interests of your child. Here are a few of the estate planning topics that need to be discussed by new parents:
- Inheritance — Inheritance planning is essential for anyone with a child. In the event of your death, having an estate plan with a will or a living trust ensures that your assets are properly distributed to your chosen recipients, including your child(ren). A will is a legal document while a living trust is an arrangement that is often preferable, as it avoids the probate process. These estate plan options outline who will inherit your assets as well as beneficiaries to your financial accounts, so make sure they are current.
- Trustees — It is important to not only have an estate plan, but also to determine who will carry out your wishes. A trustee is a person of your choosing who will administer your living trust. This means that they oversee managing your assets with the interest of your beneficiaries in mind. A trustee administers the assets and protects them for your beneficiaries as well.
- Guardians — If you were to pass away, or become unable to care for your child, it is important that you determine who will be your child’s guardian in your absence. People often choose family members, but you can pick anyone who you feel is fit to take care of your child. Your chosen guardians will be listed in your estate plan, as well as any instructions you have for your child’s future care. Typically, we advise clients to make the trustee and the guardian of children two different people to help separate duties.
- Insurance — When things go wrong, insurance is there to help you cover the damage. As a parent, two of the most important types of insurance policies are life insurance and health insurance. While many people have health insurance before having a family, it is important that your child is covered under your policy immediately at birth. Life insurance is also essential, because it ensures that your designated beneficiary, likely your spouse or child, will receive payment if you pass away.
- Emergency fund — We have always been told to have money saved for a rainy day, referring to money needed for unexpected obstacles. Having an emergency fund can come in handy in a variety of situations as a parent. It can alleviate some of the financial strain that comes from situations like medical issues that are not completely covered by insurance. Your estate plan should list who your emergency fund should be dispersed to.
Talk to a ProVise CFP® professional about estate planning for new parents in Tampa, FL
Are you a new parent and wondering where to start with your estate planning? At ProVise Management Group, our CERTIFIED FINANCIAL PLANNER™ professionals can get to know you and your current financial circumstances, goals, risk tolerance and personal values to help you develop a plan that works for you. We can also create a written plan for you at a fiduciary standard of care. All our written plans come with an unconditional money-back guarantee. If you are unhappy with your written plan, you can return it to us, and we will refund 100% of the fee paid.
Are you ready to talk to a professional about estate planning as a new parent? Contact ProVise today to schedule a complimentary consultation.