The birth of a child comes with enormous responsibilities for the parents. After all, you have a new life to take care of. And while the adjustments you need to make following the birth of your child are numerous, there is one key item that you must never overlook: updating your estate plan.
An estate plan, as you probably know, is a living document that needs periodic review and update to reflect the changes in your circumstances. Here are the crucial updates you need to make on your estate plan after getting a baby.
Creating a will and naming a guardian for your child
As a new parent, there is more to having a will than just designating who will inherit your assets when you pass on. One of the most important reasons for creating a will is naming a guardian whom you can entrust with your child should something happen to you.
By designating a guardian for your child, you are choosing someone you believe shares the same value system as you and whom you believe can do a good job raising your child. This is, without a doubt, one of the most important decisions you should make as soon as you become a parent.
Setting up a trust
Should you pass on before your kid attains the age of adulthood, the law will not allow them to assume direct control of the inheritance in their name. Now, this can result in a problem as the court will be compelled to assign someone the responsibility of managing these assets on behalf of your child until they become an adult. To address this, you need to specify what assets you will be leaving for your child, who will manage them and how and when your child will be able to access their inheritance. This is where a trust comes in.
By creating a trust, you will be able to designate a person or entity to manage the money you have left behind for your child. Better still, you can set conditions on how the funds will be made available for your child.
The birth of a child is always an exciting milestone in life. These are just some of the estate plan updates you need to make when you have a baby.