Estate Planning for New Parents: Navigating Your Responsibilities
While many associate estate planning with asset distributions, for new parents, it involves safeguarding the future of your child. This blog explores estate planning steps for new parents, focusing on aspects beyond the traditional will for asset transfers.
The Essence of Estate Planning for New Parents
Estate planning as a new parent isn’t just about managing assets; it’s primarily about ensuring the well-being and care of your child if you’re no longer there. It involves legal documents and decisions that secure your child’s future, both financially and in terms of guardianship.
Naming a Guardian in Your Will
While typically known for asset distribution, a will is vital for new parents as it allows you to nominate a guardian for your child. This decision is perhaps one of the most important you’ll make in your estate plan.
Considerations in Choosing a Guardian
When selecting a guardian, consider factors like values, parenting style, location, and the potential guardian’s willingness and ability to take on this role. Discuss your decision with the chosen guardian to ensure they’re willing and prepared for the responsibility.
Setting Up a Trust for Financial Security
A trust is an excellent tool for managing and protecting assets for your child. Unlike a will, a trust offers more control over when and how your child receives financial support.
Types of Trusts
Consider setting up a revocable living trust, which can be altered as your circumstances change. For specific purposes, like education, specialized trusts can also be established.
Choosing a Trustee
Selecting a trustee is as crucial as naming a guardian. The trustee will manage the financial aspects of the trust, making decisions about investments, distributions, and overall management of trust assets.
Factors in Choosing a Trustee
Choose someone who is financially savvy, trustworthy, willing, and able with appropriate anticipated longevity. This can be a family member, friend, or a professional trustee.
Living Will
With a living will, you state your preferences regarding use of life-support methods like resuscitation, assisted respiration, and feeding tubes. You can also add your pain medication choices along with your organ and tissue donation designations.
Assigning Power of Attorney
A durable power of attorney for health care allows you to appoint someone to make medical decisions on your behalf that are not covered in the living will. Similarly, a financial power of attorney gives someone the authority to handle your financial matters.
Life Insurance Considerations
Life insurance is an essential component of estate planning for new parents. It can provide financial security for your child’s upbringing and education in the event of your untimely death. A trust can be named as the beneficiary of a life insurance policy.
Types and Amount of Coverage
Evaluate the types and amounts of life insurance available. Term life insurance is often a cost-effective option for young families. Ensure that the coverage is sufficient to meet your child’s needs.
Letter of Intent: Guiding Future Caretakers
A letter of intent, while not legally binding, is an important document where you can express your wishes, hopes, and instructions for your child’s upbringing.
What to Include
This letter can include details about your child’s daily routine, educational preferences, medical history, and even your hopes and dreams for their future.
Regular Updates and Reviews
Life changes rapidly, especially with young children. Regularly review and update your estate plan to reflect changes in your family, financial situation, and in your guardianship or trustee choices.
Final Takeaways
For new parents, estate planning is a profound expression of love and responsibility towards your child. Embarking on this journey means not only securing your child’s financial future but also providing clear directions regarding their upbringing and care.
Remember, estate planning is an ongoing process, evolving as your family grows and changes. By taking these steps, you lay a foundation of security and love that will guide your child through their life, even in your absence.
Contact Our Firm!
We can help you put a solid plan in place regardless of your life situation. To get started, call our Oklahoma City estate planning office at 405-843-6100 or send us a message through our contact page.
In addition to our OKC location, we also have an office in Tulsa that can be reached at 918-615-2700.
After helping his own family deal with a lengthy probate and the IRS following his father’s untimely death in a farm accident, Larry Parman made a decision to help families create effective estate plans designed to reduce taxes, minimize legal interference with the transfer of assets to one’s heirs, and protect his clients’ assets from predators and creditors. Read More! Latest posts by Larry Parman, Attorney at Law (see all)
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