Parents anxiously await the arrival of a new baby. While you are probably focused on getting everything ready for the baby, there is one crucial duty that you might overlook. You need to set up your estate plan so you can ensure your child is taken care of if something happens to you. This plan will only go into effect if something happens to you and the other parent.
There are several things for you to think about. These cover different aspects of the child’s life, and they create a comprehensive plan if the unthinkable happens.
Who will care for the children?
One of the most important decisions you have to make now is who will raise your children if you aren’t here. You need to choose an individual who can handle the task, which could mean that you pick someone around your age instead of a much older person. The person must also be willing to rear the kids using the same values you have. The person with this responsibility is the guardian you should name. You can even name back-up options in case the primary choice becomes unable to fulfill the duties.
Who will make financial decisions for them?
You need to name a trustee over the child’s financial accounts. This person will make decisions about money matters. You can have the same person named as trustee and guardian, but some people choose to have different individuals as an extra level of protection for the kids. If you do this, you need to outline what financial decisions the guardian can make without the trustee having input. For example, you may decide the guardian can spend up to $500 on back-to-school shopping without needing to involve the trustee.
Where will your belongings go?
Your assets and belongings can support your children. You can get this plan in place by setting up your will and trusts. Remember that a will goes through the probate court and is public record. Trusts are much more private arrangements since they aren’t open for public review.
Your bank, investment and retirement accounts are likely covered by a payable upon death designation. These aren’t placed into the will or trusts because of this. When you review your estate plan, double-check those accounts to verify that they are set up, so they provide support for your children.