Why New Parents Need an Estate Plan
Welcoming a new child into the family is one of the happiest events a person will ever experience. A new child brings a wealth of exciting possibilities and the opportunity to enjoy many new milestones. Of course, a child also brings a lot of responsibility that will last, to some degree, for the rest of the parent’s life. In the wind down of this life-altering experience, parents may be apt to overlook the need to create or update an estate plan that reflects this new family member. No parent wants to envision not being around to raise his/her child, but there are no guarantees something unexpected and tragic will not happen. Thus, it is vital to have a legally enforceable plan that sets out who would be responsible for the child’s care, any assets that would go the child, and the person/entity that would be in charge of managing these assets for the child’s benefit. Making these decisions early on and formalizing them as part of a comprehensive plan is the best way a parent can protect his/her child in the event something unfortunate happens. An overview of some basic steps new parents should take related to estate planning will follow below.
Drafting a Will – Appointing A Guardian
A will is the simplest form an estate plan can take, and allows the creator to designate who receives legal rights to his/her property after death, and most importantly for parents, is a vehicle for naming who should have rights to become the child’s legal guardian in the event both parents die. Legal guardians have the same rights as parents over directing a child’s upbringing, healthcare and education. Thus, choosing the right person is essential, and if parents do not leave directions on which person should assume this role, a court will appoint a guardian, who be a person the parents would not want.
Younger parents may not have the ability to leave a child with a sufficient source of financial support if something happens. Life insurance is an inexpensive option that would offer a measure of financial stability if one or both parents die unexpectedly. One important point to consider with these policies is the designation of a beneficiary. A parent could directly name the child as the beneficiary, but this could potentially put the funds under the control of the guardian, which may not be the right person to handle financial matters. By setting up a trust and naming it as the beneficiary of the life insurance policy, parents have more control over how and who has the ability to manage this asset.
Durable Powers of Attorney
Lastly, each parent should have durable powers of attorney to address who would have access to and authority over decisions on their financial and health care affairs in the event of incapacity due to illness or an accident. Having these documents in place will save a spouse and other family members a lot of frustration and time if something were to happen. While chances are these directives will never be used, being proactive will head off the likelihood of disagreement and make a tragic situation a little easier to navigate.
As new parents, it is hard to envision not being there for your child, but you want to make sure your child is fully protected in the event you cannot. The Tampa law firm Bubley & Bubley, P.A. can provide all your estate planning needs, and have the knowledge to advise you on the best arrangement to carry out your wishes. Contact us to schedule a consultation.