Must-Do Estate Planning for New Parents
Becoming a parent is one of the most exciting and most terrifying moments of one's life. All at once a little human is depending on you, and you know you would move heaven and earth for them.
In the rush to assemble cribs, baby proof cabinets, and stock up on diapers, many parents forget or push off another important task that all new parents should undertake: estate planning.
Death is not a fun topic to think about at any time, but it is especially disheartening to think about when one is on the verge of becoming a parent, or has just brought a bundle of joy home from the hospital. But a little bit of soul-searching, and a small mountain of paperwork is the least you can do for your child.
Even if you don't visit with an attorney and do a full estate plan, there are a few key things new parents should do to ensure their child is taken care of if the worst happens.
First, both parents should fill out medical directives and medical power of attorney documents. Mothers in particular should make clear what they want their partner to tell the doctor if a situation arises where only the mother or only the child will make it through the birthing process alive.
Second, guardians that will step up and assume the role of parent should something tragic happen should be officially designated. If proper paperwork is not filled out, and something happens to you, a court will decide what is best for the child. The only way to ensure Cousin Eddie from the National Lampoons series doesn't get custody is to say who does.
Third, all bank accounts, retirement funds, insurance policies, and other financial documents should be updated to name your child as a beneficiary. Most of the benefits tied to these items pass automatically at death, giving the beneficiary immediate access to funds, and avoiding the need to go to court to settle ownership.
Finally, it is a good idea to look into getting a life insurance policy that is large enough to cover the costs of your debts and cushion your child's transition to a new family. Most people with young children can get a very affordable plan, and it is impossible to overstate the peace of mind it can bring.
This is all a bit overwhelming to think about, so hiring an attorney to do the necessary paper pushing can be a big help.