New parents have more of an incentive to estate plan than most other adults. They want to ensure the safety and well-being of their new children. It is easy to put off estate planning immediately after the birth of a child. There is an adjustment period as new parents acclimate to their more demanding schedules and the responsibilities that come with keeping a newborn alive.
However, within a few months, families typically settle into a new routine with their baby. At that point, parents can start considering how to protect their baby if anything unexpected happens. The three documents below are critical for new parents who want to protect their children.
1. A last will and testament
Wills are frequently the most important estate planning document. Parents concerned about their babies can identify the person they have selected as guardian should anything happen to them in a will. They can even name an alternate candidate in case their first choice isn’t available or capable of the guardianship when the parents die. Wills can also provide instructions regarding the distribution of property from the parents’ estate after their passing.
2. An advance directive
Parents with young children could potentially experience emergencies that leave them incapacitated but not dead. An advance directive allows an adult to name someone they trust to serve as their health care proxy and make decisions on their behalf. People who do not have spouses and those worried about their spouses experiencing the same incident, such as a car crash, may want to name another person who can manage their medical affairs. Proper planning helps ensure that parents can receive appropriate care after a medical event or injury renders them incapacitated.
3. Financial powers of attorney
Incapacitating incidents don’t just leave people in need of medical support. They may require financial assistance as well. Financial powers of attorney can help ensure that someone other than a spouse is available to pay a mortgage, manage a small business and otherwise fulfill the financial obligations of a parent. The agent or attorney-in-fact they select can manage their finances to ensure the stability of the entire family until the parent recovers.
Divorced or single parents, as well as those with significant assets, may also want to consider establishing a trust. Trusts provide more protection for minor beneficiaries than a direct inheritance usually offers.
Sitting down with a skilled legal team to create an estate plan can help parents identify their needs and take appropriate steps to protect their children. Parents who draft documents while their children are young can benefit from peace of mind about their child’s protection, regardless of what the future holds.