Someone close to you has just had a baby. Congratulations! Maybe you're now Ohio's newest grandparent or an uncle, trying to find the perfect gift to welcome the baby to the world.
Instead of a stroller or a stuffed animal, how about helping the new parents create an estate plan?
Young parents of a new baby probably will tell you they are just starting out, don't have many assets and don't need to worry about estate planning just yet. That's exactly when they need to worry about it. Who will take care of that baby if something happened to the parents? How will the children have any financial security? How about a college fund?
Remember this: almost two-thirds of Americans don't have a will. And if those young parents leave the house for a date night and never return, the courts will be in charge of deciding who will care for that precious baby.
Here's what every new parent should do when it comes to estate planning.
- Name a guardian for the child. You will want assurances that your child will be taken care of by choosing someone close to you to become the guardian. Usually, it's a family member or close friend, but be sure to choose someone who physically can care for the child, is financially and personally stable, and will raise your child the way you would have. As much as you love your parents, they might not be the best choice if they are in their 60s at the time the baby is born, for example.
- Buy life insurance. It can pay for your child's living expenses as they grow and perhaps even for college. Make sure the beneficiary of the insurance is someone who will save the money for your minor child.
- Create a trust. That will safeguard assets for your child and make them available when the child reaches a predetermined age or for a specific purpose. The guardian will not be able to use the funds.
- Choose a trusted executor to administer your estate to make sure your child receives the assets as you specify.
No new parent wants to think about the "what ifs" of life, but it's essential to protect their child. An estate planning attorney can explain all the benefits. Creating an estate plan is just another way to protect our children.