Estate Planning Considerations for New Parents
Everyone tells you becoming a parent is life-changing. There are many new experiences that you’ll encounter, and, of course, there are a lot of new responsibilities. The weight of these responsibilities can be heavy, and when it comes to decisions for your child within your estate plan, thinking about the issues may be overwhelming. While planning for the future seems daunting, you need to make sure you’ve thought through the implications, made proper decisions, and worked with your advisory team to document everything properly.
One of the main decisions to make is who you will name as your child’s legal guardians if you and your spouse pass away. There are a lot of issues to consider. Can they take on this responsibility until your child reaches adulthood? Do they share your views on education, religion, rules, discipline, and health care? Where do they live? Will your child need to change schools? How will they facilitate visits with non-custodial family members for birthdays, holidays, and other occasions?
You also need to name a conservator to manage your child’s property. If you establish a trust, you will name a trustee to handle the financial matters. Naming someone other than the guardians for this role is usually a good idea, because you split up the workload and also because people have different strengths.
You must also decide how and when your child should receive their inheritance. Many parents decide to hold their child’s inheritance in trust until the child reaches a financially mature age, with distributions in the meantime for the child’s support. If your child has special needs, you should consider holding their inheritance in a special needs trust for their lifetime to address state aid qualification considerations.
With the arrival of siblings for your first child, you need to evaluate whether the provisions in your estate plan should be updated. Are the guardians you originally named well-suited to care for multiple children?
Along with determining who will serve these important roles, you should evaluate your overall financial picture when you become a parent, with special attention to life insurance needs and college planning, and how these changes impact your retirement planning.
Updating your estate plan when you have a child likely gets placed on the bottom of a very long to-do list. However, my clients often tell me that once they’ve signed their estate plan, they feel a great weight lifted from their shoulders.
ABOUT THE AUTHOR – LISA M. LEHAN
I am a shareholder of Koley Jessen P.C., L.L.O., located in One Pacific Place. My practice is focused on estate and tax planning. Outside of the office, I enjoy spending time with my husband and our three children. For help with your family’s estate planning needs, please contact me directly at 402.343.3881.