As a new parent, you are wise to think about an estate plan. Having an estate plan in place allows you to provide for your child’s security and well-being no matter what happens to you or when.
Kiplinger describes some specific documents that you should consider including in your estate plan as a new parent.
Life insurance replaces your family’s financial support if you were to die and were no longer earning. If you do not already have life insurance, now is a good time to consider purchasing it.
A trust is a way for you to make sure that there is money to provide for your child’s needs when he or she is young and to provide him or her with an inheritance in the future. By law, minors cannot inherit property, nor can you name them as beneficiaries on a life insurance policy. However, you can put the inheritance or the life insurance policy in a trust, and then the trustee can take care of your child’s money until he or she is old enough to claim it.
Living documents include powers of attorney and advance directives that give other people authority to make medical or financial decisions on your behalf if you become incapacitated. You can use these documents to provide for your own needs as well as those of your child in the event of your incapacitation.
You need to designate a guardian to take care of your child’s day-to-day needs if you are unable to do so due to death or incapacitation.
If this is your first child, keep in mind that you may have to update these documents in the future if you have more children.