Just as with any important life event, an estate plan should be reviewed every time a baby is born. There are events that parents can plan for to prevent court costs, legal fees, plan for college costs, and nominate a guardian if something were to happen to both parents. Here are a few essential items that should be a part of an estate plan for new parents:
1. Providing a guardian for your minor child is necessary for any parent. In case both parents pass away or become incapacitated, you should have at least one trusted individual named as guardian. Click here for more information on why naming a guardian is important.
2. With the costs of a good education climbing higher each year, a 529 College Savings Plan is a great way to plan for your child’s future. The 529 Plans allow tax-free growth for assets used for higher education expenses. Even if you can only afford making small deposits, starting early can make a huge difference in the amount of educational loans your child will need to repay.
3. Minor children cannot receive an inheritance until they reach the age of 18. This is why it is so important to set up a Trust for your minor child in your will. A well-drafted Trust can avoid unnecessary expenses and enable your child’s caretaker to more efficiently provide for your child. Additionally, you can determine when your child will receive the trust balance, whether that is at 18, 21, 25, or any other age.
4. It is important for every adult to have at least some form of life insurance. Having a child makes life insurance even more important. Listing your child’s Trust or 529 Plan as a beneficiary will ensure that your child has financial security in case something happens to you.
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