Every year there are millions of births recorded in the U.S. While becoming a parent is among the biggest joy of your life, it brings a lot of responsibilities along with it. You ensure that you give and do everything for your child to make their life comfortable along with securing his/her future. To secure your child’s future, you must ensure that you plan your estates. Though no one wants to talk about their death it is important for everyone and especially when you become a parent. The young parents often think that estate planning can be averted until they are older; however, the fact is you should plan your estates as early as possible.
Estate Planning for New Parents-
Estate planning is important for young parents to ensure that your children will always be financially and emotionally in good hands. You need to make sure that your children are provided for in the event something happens to you while the children are still minors. Hence, you must plan as early as possible to avoid any such situation. While most of the young parents don’t need complex estate planning, they must ensure that the following are considered:
1. Last Will: A will is the most basic document of estate planning though which you address your wishes regarding the distribution of your estate after your death, name an executor to settle this process and identify a guardian for your minor children. In the absence of a will, the state court will determine the aforementioned things under the state intestacy laws.
2. Guardianship: While planning the estate, the most important thing to be considered by the young parents is to assign a guardian for their minor children who will take their responsibility in case both of you die and become incapacitated. This is a very crucial decision and hence must be taken very carefully as it will have a lifelong impact on your children.
There are several factors that must be taken care of while nominating a guardian for your minor children like the person’s willingness to accept the responsibility, the person’s bond with the children and their financial ability. In case the person denies the responsibility, then the state court will appoint a guardian for your children. Hence, you need to ensure that the person is trustworthy and willing to take responsibility.
3. Life insurance: While ensuring that your children are cared for physically and emotionally, life insurance helps you to ensure that they are financially cared. A life insurance policy is a good way to ensure that your dependents can sustain expenses such as food, shelter and medical in case you die. It provides the financial resources your children would need to get themselves from childhood to adulthood. There are various types of life insurance, such as whole or term, and each has its own benefits, however, you should choose the policy depending on the specific needs of your family.
4. Trust: Trusts are also important in estate planning to pass your assets to your heirs. It is more preferred by young parents when they want to provide expenses for their children on a regular basis instead of providing whole wealth at one time. In the case of minor children, they will not be able to handle the assets and wealth by themselves and even need to be taken care of. There are several types of trusts that function differently and you can choose any of it in your estate plan according to your personal situation.
5. A living will: It is the legal document that directs what type of treatment you would like to have in case of a dire medical situation. It also specifies after which extent of illness you want your life supporting system to be taken off i.e. end-of-life decision.
6. Power of attorney: This legal document designates a person who will act on your behalf to take your financial and medical decisions. There are two types of POA documents viz. financial POA which designates a person to take care of your financial affairs and the other is medical POA which designates a person to take care of your healthcare decisions.
7. Beneficiary designation: There are several other accounts that value up your wealth like saving accounts, retirement accounts, and more. You need to ensure that the beneficiary in these accounts is according to your current life and wishes and hence you must review and update them regularly.
By putting all these documents ready, your estate plan will be complete and thus you can be assured that after your demise, your family is being taken care of and is in a good position in terms of emotional and financial terms as desired by you. You will be stress-free during your life while ensuring that your family will be stress-free after your death.