Welcoming a new addition to the family is a joyous occasion. My wife and I have been blessed with two wonderful boys. We love spending every chance we get with them and find ourselves, more often than not, on the football or baseball field with them most nights. Having an effective estate plan in place has provided us with peace of mind in ensuring that whatever happens to us, there is a plan to take care of our kids. While estate planning might not be the first thing on your mind, it's a crucial step to ensure the well-being of your little one. For us, estate planning has been a journey and something that took a dramatic life event to learn the importance of. I am on a mission to educate as many families as possible on the importance of estate planning so they don't face a crisis like my wife and I met when she was diagnosed with Stage 3 Breast Cancer in 2020. While careful planning is needed for any family, below is a quick checklist to ensure your estate planning is up to date for new parents. (1).jpg)
1. Draft a Last Will and Testament and Appoint a Guardian (and backup guardian) for Your Children
Every parent needs a will, as this is the document wherein you can designate a guardian for your minor children. For further discussion on the importance of naming a guardian for your minor children, visit our post on this topic. Selecting a guardian for your child is one of the most significant decisions you'll make. Ensure that you discuss your wishes with the chosen guardian and outline backup options.
2. Establish a Revocable Living Trust
For most parents of minor children, a revocable living trust is essential to ensure that your children receive your assets seamlessly and do not receive them before they are ready. As you can appreciate, receiving an inheritance at eighteen can be extremely dangerous and produce lifelong consequences for children. A living trust allows you to transfer assets seamlessly to your child without undergoing the lengthy probate process. In Florida, trusts also offer flexibility, letting you stipulate terms for asset distribution.
3. Obtain an Appropriate amount of Life Insurance
One of the most essential steps new parents can take is obtaining an appropriate amount of life insurance coverage. Life insurance isn't just a financial product; it also provides peace of mind. It assures that, in the unfortunate event of a parent's untimely passing, the child's financial needs—from education to daily living expenses—will be covered and that the guardians you appoint in your will can afford to take care of your children. Consult with a professional about obtaining life insurance. Term Policies can often be obtained at very affordable rates and cover the time of your children's most vulnerable years.
4. Set Up a Durable Power of Attorney
One critical yet often overlooked step for new parents is establishing a durable power of attorney. A durable power of attorney designates a trusted individual to decide on your behalf should you become incapacitated or unable to make decisions yourself. For new parents, this is especially crucial, as ensuring your child's ongoing care and protection is paramount. From managing financial assets to ensuring your child's immediate care aligns with your wishes, a durable power of attorney can provide a safeguard and continuity if you become incapacitated and cannot manage your finances to ensure your child's needs remain met.
5. Draft a Living Will and Designate a Health Care Surrogate
Having a living will remove a tough decision for your child regarding your end-of-life care. By outlining your medical preferences and end-of-life care, you remove the burden from your child of making this choice without the guidance of your living will or advanced health care directive.
Designating a healthcare surrogate is a vital decision that often goes overlooked. A healthcare surrogate is an individual chosen to make medical decisions on your behalf if you're incapacitated or unable to communicate your wishes. For new parents, this is incredibly paramount. In unforeseen situations where immediate medical decisions are necessary, having a designated healthcare surrogate ensures that choices align with your values and preferences, safeguarding both your health and your child's future well-being.
6. Review Beneficiary Designations
A critical item to regularly review is your beneficiary designations on any bank account, life insurance, retirement account, etc. You should update these accounts to include your child or the trust established for their benefit. Missing this critical step can lock these assets up in the expensive and time-consuming probate process.
7. Establish a College Savings Plan
Consider setting up a Florida 529 Savings Plan, allowing your money to grow tax-free for educational expenses. This can be an excellent vehicle for providing for your child's future education costs.
9. Review your Plan Regularly
One of the most important things you can do is to continually review your estate planning documents (particularly your guardian designations), as life and family dynamics can quickly change. As your child grows, your financial situation evolves, or if you welcome more children, review and update your estate plan with an experienced estate planning lawyer.
Estate planning is an expression of love and foresight for your child's future. While the journey may seem daunting, a seasoned Tallahassee estate planning lawyer can guide you every step of the way, ensuring your child is protected and planned for throughout life's storms.
