Congratulations! You’re having a baby. Time to start thinking about estate planning.
Though most people think of estate planning as an “end-of-life” issue, there are actually many legal and financial issues that should be addressed as soon as possible, like sufficient insurance coverage that will support the child if something happens to you.
Other than financial considerations, one of the most important things you should do is to designate a legal guardian for your child. Thinking about your mortality at one of the most eventful moments of your life may not seem to fit your mood, but if you and your spouse are unable to care for the child for any reason, such as death, illness or incapacity, you want to have the choice of who will care for your child. If you don’t name a guardian before one is needed, the court will. Wouldn’t you rather make that decision yourself?
As mentioned above, insurance coverage of all types should be reexamined. Life insurance is especially important to insure that there will be enough money to care for your child until he or she reaches the age of majority. If you die and your spouse survives, would you want him or her to have to work full-time to make ends meet or have the option of staying home for a few years to focus on raising the child? You may even consider something like an irrevocable life insurance trust to hold the proceeds and ensure that they will be there when your child needs them for education or other expenses.
What if one parent decides to quit his or her job and stay home? Not only will this change your family income, but if that parent gets benefits from work that are important to the family, those benefits may have to be replaced. Health insurance, retirement benefits, 401(k)’s, and other benefits should be assessed.
Having a baby is certainly one of the most exciting – and frightening – times of your life. By addressing some of these issues as early as possible, you can give yourself some peace of mind. A knowledgeable estate planning attorney can help you determine the best ways to protect yourselves and your new addition.