Having children is a life-changing event in many ways. In the commotion of it all, don’t forget to plan for today and tomorrow with estate planning documents.
Plan for Today
Create “living documents”, which cover your needs, and therefore your children’s needs, in the event of your incapacitation. This includes a financial power of attorney, where you name the person(s) who can make financial decisions on your behalf. A power of attorney can also allow you to make guardianship provisions for your children so that the courts don’t have to.
Other living documents include healthcare directives such as a HIPPA authorization, healthcare power of attorney, and a living will. Healthcare directives let you outline your preferred healthcare procedures and decisions now, in the event that you are not able to communicate them in the future.
Plan for Tomorrow
These are the documents that will take effect upon your death. Primarily, this is a Last Will and Testament. A complete Last Will and Testament should clearly outline the following:
- The Executor or Personal Representative
- The Beneficiaries (usually your spouse and/or children)
- Instructions for How and When to Distribute the Assets
- Guardians for Minor Children (these are the people that will care for your children upon your death)
Consider a Living Trust
You’ll still have the above documents and the protection they offer, but there are other benefits that a Living Trust can provide:
- Avoid Probate
- Harder to Contest
- Continuity (continues to operate after your death)
- Provide for minor children’s future needs
- Create structured distributions to children
Buy Life Insurance Policies
In an effort to make sure your family is cared for financially, consider a life insurance policy. A general rule of thumb is to take out a policy that is 20x your income. Make sure to name a beneficiary to the life insurance policy. In the event of your death, that person will have access to these funds to help take care of your family. With a Living Trust, you can also funnel the life insurance funds into the Trust, which can then be set up to most benefit your loved ones.
Hire an Attorney
Do-it-yourself estate planning services might seem like an inexpensive and “good enough” option. However, you should always hire an attorney to help create legal documents. The do-it-yourself forms rarely account for the specific needs of new parents.
It is recommended you review and/or update your estate plan every 3-5 years, or at any major life event such as:
- Addition of Stepchildren
- When children turn 18
- Career changes
- Purchasing a home
Each of the above familial, financial, and legal changes requires the knowledge of an experienced estate planning lawyer.