There are not many milestones in life as significant as becoming a parent. After all, you have got a new life to raise and care for.
While the list of things to do when you become a new parent may be endless, there is a critical item that you should never forget about: creating or updating your estate plan. Most people fall for the misconception that estate planning is the reserve of the rich and mighty. However, this is not true.
Here are important estate planning steps you need to take as soon as you become a new parent.
Update your will
A will is probably one of the most important legal documents that you will ever create. Through your will, you can articulate the details of your child’s financial future by including them as your estate’s beneficiary. The last thing you want is to assume that your child will automatically inherit your assets when you pass on.
While updating your will, it is equally important that you name a guardian for your child. This is the individual who will assume legal stewardship of your child should something happen to you and the other parent. As you can imagine, this is not a decision you want to take lightly.
Consider creating a trust
Just like a will, a trust is another important estate planning tool that allows you to set aside assets for your child. A trust comes with several benefits such as avoiding probate, eliminating certain estate taxes and ensuring privacy. Most importantly, a trust allows you to indicate how you want your child to access their inheritance. For instance, you can spell out that your child will access a certain fraction of their inheritance upon reaching a specific milestone in life like clearing college, getting married or having children of their own. In other words, a trust gives you control over your assets even after your death.
Becoming a parent is a big deal. Find out how you can create an estate plan that safeguard’s your child’s future.