Estate Planning 101: 5 Steps for New Parents

Estate Planning 101: 5 Steps for New Parents

You’ve prepared the nursery, you’ve got more diapers than you know what to-do with, you’ve even managed to send thank you notes to family and friends for all the new baby gifts, you’re pretty much killing it as a new parent! Good job! As a new parent, you’re wrapped up in all things related to being a new parent. Life is as good as it gets right now, despite so many new adjustments. Now what? Now it’s time to make sure you complete one last thing off your new parent to-do list and that’s prepare (or update) your estate plan! 

No one wants to plan for these moments but the time to do it is now! Here are 5 easy steps new parents can take to prepare for the unexpected: 

Step 1: Set-up living and post-mortem documents

Not to be all morbid – but when it comes time to estate planning, you have to think of the worst case scenario, because then, and only then, do you know how to completely protect your family and your child(ren). 

It’s important to have a plan set-up for if something happens to you that requires life or death decisions! Having a power of attorney, and naming a health care proxy, is essential. If you don’t already have documents for this, there’s no time like the present to make some! If you do, once you have kids, it’s a good idea to think about if the person you designated before, still makes sense. 

If something happens to you, and you die, you want to make sure you have a will and trust set-up so that your child is raised the way you want to, and that your parenting spirit will live on through this person. 

Step 2: Make a plan for who is guardian of your child(ren)

Just this morning you’re breathing in a fresh baby smell. You know that amazing smell that only a new baby can bring. Now, well now you’re having to stop to think about who is responsible for your child if something should happen to you and your significant other. It’s a tough jump to make but that new baby smell is just the beginning and there’s no time like now to think about protecting their future. 

When making a plan for who is going to be guardian of your child(ren), figure out who you want to have legal custody of them. A few things to think about: 

  • Are they physically able to do so?
  • Will this be an emotional or financial burden on them? 
  • Are people you’re considering in good shape? Are they healthy? Are they young? Are they old? Do they have other health issues  going on?
  • Do they have the same moral compass as you? Do they have one you want to be passed on to your child(ren)?
  • Do they believe in the same religion as you? Would they be okay with omitting religion? 
  • What is their belief in education? 
  • What’s their parenting style?

These are all things you should be asking yourself when thinking about who you want to leave your child(ren) with. And last but not least, do they want to take on your child? This is a HUGE responsibility that will forever impact their lives and the lives of your children? It’s important that this decision would be healthy for everyone involved.

If you were to die today, do you and your spouse know who you would leave your child(ren) with? If not, it’s a great time to talk about it, as hard as it may be. 

Step 3: Establish a trust

A trustee has the financial responsibility to take care of what you left behind for your child (and other loved ones). 

Trustees and guardians are often the same people, but not always. The person you want to take care of your child(ren) day-to-day may not be the same person you want to be responsible for them financially. For example: you may trust a parent to be responsible with your loved one but know that they are financially irresponsible, so you may need a third-party to help manage the trust for the best interest of your child(ren). 

Creating a trust ensures your money and assets are protected, and given to whom you intend for them to be given to. If you do not create a trust or estate plan, the state steps in! No one likes when that happens so make sure to set-up a trust that helps support those you’re leaving behind. 

A guardian is only responsible for your child(ren) until they turn 18, a trustee may be with your child well into their adulthood – depending on what kind of assets or money you have left behind and how you want it dispersed. 

Step 4: Buy life insurance. Set-up Retirement and Investment Accounts.  

You just had a baby (or two or three) and your family is young! No one wants to think about life insurance or what documents they need in the off chance that they die leaving behind a young child, but the reality is, there’s no time like NOW to plan for the unexpected. If you don’t buy life insurance now, when will you? If you wait until it’s too late, then it’s too late. 

Buying life insurance is just an additional step to helping ensure your child is set-up and taken care of in case something happens to you. 

Just like life insurance, you want to make sure that as your family changes and evolves, so do your retirement and investment accounts. There’s no time like the present to make sure you have these accounts going, or start them now, to ensure your child(ren) have their best shot at a great future. 

Step 5: Update beneficiary designations.  

Whether it’s life insurance, retirement accounts, investment accounts, your bank accounts, real estate investments etc, there’s no time like the present to ensure that your beneficiaries are clearly set-up amongst all of your accounts. Don’t assume everything is set up to go to who you want it to go to, ensure that your i’s are dotted and your t’s are crossed by having beneficiary designations lined up. This leaves no room for interpretation. 

Your loved ones will already be grieving the death of you (and maybe even your spouse), and now everyone will be forced to figure out how to honor your spirit and raise your child(ren), laying out a clear and concise plan for everyone will help make this horrible transition, just a little bit easier. Having to go through life’s most unexpected plans is only made worse when there is no plan laid out. Help those you might leave behind navigate this excruciating time, making things a little bit easier. 

Life is full of the unexpected, we can’t plan for that, but we can prepare for the unexpected. Creating an estate plan is one step towards that. We know that as busy parents you might not have the time, or resources available to talk to a lawyer.  Jessica Henman Attorney at Law, has everything you need to create an estate plan that’s right for you. Check out our shop here. With easy to draft documents, you can start the entire process all on your own.

Jessica Henman, Attorney at Law, is based in Chico, California (born and raised in fact) and is here to help out anyone in California. For more assistance and custom estate plans give me a call at (530) 520-3109 or email me to set-up a time to talk about getting the right estate plan, trust, wills, and other documents for your family. Whether you’re a family with young kids or a family with grown ones, I can help you every step of the way. 

I look forward to connecting with you! I’m here to help answer any questions you may have regarding estate

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