The birth of a child is one of the greatest moments in a new parent’s life. Becoming a parent brings many responsibilities to ensure the child is protected, well cared-for and loved. One step new parents in Northern Virginia should not put off in protecting their child is estate planning.
Estate planning for new parents may seem unnecessary at first, but it is actually one of the most important steps new parents should take. After all, there is no guarantee that you will live to see your child fully grown. It is important to plan for the unexpected possibility that you could pass away before your child is grown. The following are four estate planning documents new parents should execute once their child is born.
Take out life insurance
First, many new parents choose to take out a life insurance policy. This could provide the funds needed to raise their child should they pass away before their child is grown. After all, raising a child is costly and most parents will want to ensure their child’s financial needs are met.
Name a guardian
Second, name a guardian for your child. New parents should think about who they want to raise their child should they both die before the child is grown. Officially naming a guardian in your will not only ensures your wishes will be met, but it can also ease tension between relatives who may, in the absence of a legally named guardian, fight over who should raise the children.
Review account beneficiaries
Third, review your beneficiaries. Certain accounts, such as bank accounts and retirement accounts, have a named beneficiary who will receive the account assets if the accountholder passes away. It often makes sense to name your spouse as primary beneficiary on these accounts and then review with an attorney how to name the contingent beneficiaries while your children are still minors.
Execute a will and testamentary trust
Finally, execute a will that includes a testamentary trust for your minor children. In a will, you can name your children as heirs to your assets. However, remember that minor children cannot directly control trust assets until they turn 18. In the trust you should appoint a person to manage the trust assets on behalf of the child until the child is grown. You can also choose any age that the trust can end so that your 18 year old child does not receive a huge amount to handle on their own. A trust can end once the child reaches a higher age and is hopefully more responsible.
New parents have a good reason to execute an estate plan: the well-being and future care of their child. However, trying to handle estate planning on your own can lead to ambiguous or unlawfully executed documents that are ultimately not enforceable when the time comes. Thus, new parents interested in estate planning will want to seek professional guidance before proceeding, to ensure the final documents are legally sound and meet their wishes.