If you recently had your first baby or are planning to have one in the near future, your mind may be racing with questions. Will you be a good parent? Will labor and delivery go smoothly? Have you done everything necessary to protect your new or future offspring?
As a new parent, you may worry more about whether your child is getting enough sleep or food than whether you have all your estate planning ducks in a row - but that does not make the process of doing so any less important. As a new parent, there are three particularly important estate planning steps you can take that can protect your children and prevent unnecessary problems and expenses down the line. More specifically, as a new parent, it is important that you:
1. Establish guardianship
No one wants to think about what would happen to their children in the event of their absence, but naming a guardian who would care for your child if you die or become incapacitated is a critical move for new parents. Not only does naming a guardian allow you to notify that person about your decision, letting him or her emotionally prepare, but it also can improve your own peace of mind if you ever get sick, injured or what have you.
2. Create a trust
Creating a trust, or a legal entity that dictates your wishes with regard to certain assets and affairs, is also an important estate planning step for new parents. You may want to name the other parent as a trustee in addition to yourself, or you may want to give the power to someone else entirely. Creating a trust now can help ensure there are no unnecessary delays when it comes to asset distribution after your passing, and it can also help avoid probate.
3. Create a power of attorney
As a new parent, you may also find it beneficial to create a power of attorney, or a legal document that names someone who will manage your financial affairs or medical needs if you become unable to do so yourself. This person can help see that your child has access to what he or she needs if you become incapacitated.
Estate planning can be a convoluted process, but by taking these three key steps, you can help prevent serious hardship and expense down the line.