Having a child can add a layer of complexity to your life whether it was planned or not. After you have processed the shock, joy or other emotions associated with becoming a parent, you are strongly encouraged to take a look at your estate plan. If you don’t have one, creating a will or trust should be on your to-do list before the baby is born.
Add or create basic documents
A will can be a powerful estate planning tool because it allows you to dictate where assets go after you pass, and it also allows you to name a caregiver for your child. One of the drawbacks to a will is that it only takes effect after you die, which means that nothing happens in the event that you become incapacitated. Adding a trust to your estate plan eliminates this worry because it takes effect right away. If you do become incapacitated, someone will be available to manage your affairs and take care of your children.
Review beneficiary destinations
A minor child cannot own property in his or her name. Therefore, you can’t name your newborn as a beneficiary to a home, bank account or other assets. However, you can name someone you trust to use that asset for the benefit of your child in the event that anything were to happen to you. For instance, instead of an estranged former spouse, you’ll probably want your current partner, close friend or trusted family member to be a beneficiary.
Even if you don’t have children, you will want to create an estate plan and review it on a regular basis. Doing so may help to ensure that assets go where you want them to or that other key wishes are respected after you pass away.