Anytime you go through a major life change, it is important that you review and update your estate plan. One such life change is the addition of a new member into the family through birth or adoption.
Whether it is your first child or a later addition, it is important that you make the following updates on your estate plan.
Update your will
A will is an important estate planning tool that lets you articulate how you would wish to have your assets distributed when you pass on. You want to be sure that you have added the new family member as one of your beneficiaries. While updating your will, be specific about what you will bequeath the new member.
Name a guardian for your child
A guardian is an individual you designate to assume legal care of your child should something happen to you and your co-parent before they turn 18. Multiple factors come into play when identifying a guardian for your child. These include their morals and belief system, parenting ability, the living situation as well as age and stage of life. It is important that you have a conversation with a potential guardian and seek their approval before naming them as your child’s guardian in your will.
Set up a trust
Basically, a trust is an arrangement where you, the grantor, set aside certain assets (mostly funds) to be managed by the trustee. A trust is governed by the trust instrument which outlines the terms of the trust. If you die without one when your child is a minor, they will not access their inheritance until they become adults. Besides, there is no guarantee that they will have the capacity to manage their inheritance when they turn 18. A trust instrument allows you to specify how and when you would wish to have the assets in the trust made available for the beneficiaries. This eliminates a scenario where the child spends their inheritance irresponsibly.
The birth of a child brings immense joy to the parents. Find out how you can update your estate plan to reflect this important change in circumstance.