Starting a family is an exciting part of life. Parents take time to get the nursey ready, buy the right car seat, and introduce their new bundle of joy to family members. When investing time and money into the things needed for childhood parents often forget one of the most important gifts: an estate plan.
Why does a baby need an estate plan?
Infants, toddlers, adolescents, and teenagers require the guidance and support of adults in their lives. Ideally this role is filled by parents. But what if something tragic happens? Although these conversations may seem unnecessarily difficult, it is important to focus instead on the positive. Afterall, having a plan in place can provide peace of mind.
When putting together an estate plan, there are two key components when looking at the perspective of a child. These are guardianship and finances.
How do I choose a guardian?
Unfortunately, there is no simple answer to this question. The answer will vary with each family. Some will choose one of the parent’s siblings while others prefer a dear friend. It is important for parents who are navigating these decisions to discuss their goals. This can include everything from parenting styles and discipline techniques to school and extracurricular opportunities to faith and values. The list is seemingly endless. Try to find a few of the most important things and go from there.
Then, review the responsible adults in your life to see if any fall in line with these priorities.
Once you have an idea of who would fit this role it is important to include that person in the discussion. Hollywood has made many movies that make light of the individual thrown into a parenting situation without any knowledge of their role. You can better ensure both the individual and your child are of to a strong start by making sure the individual is open to the idea of raising the child and outlining some of your hopes and wishes.
What about finances?
It costs money to raise a child. This could be a setback for a guardian. You can help ease this concern by taking this into account before you reach out to a prospective guardian.
A will is often a good option. Another is a trust. Parents can have assets transferred into a trust that then fund the rearing of the child. A trustee, the individual that manages the trust, can have instructions that include things like helping to buy a home in a good neighborhood and funding private school or other activities.
These questions provide a valuable starting point. Parents looking to solidify their estate plan are wise to seek legal counsel to help better ensure the plan meets their wishes.