Do New Parents Need to Make an Estate Plan?
The number of children born into households with a net worth of at least $10 million has increased by 856% since the 1980s. New parents who have a high net worth or income do need to make an estate plan. While you might be focusing on your child’s sleep habits, feeding or weight, it’s also important to look ahead to their future. If something terrible were to happen to you, an estate plan created with the assistance of an estate planning lawyer ensures that resources and a framework are in place for your child’s well-being until they become an adult and through their adulthood.
What Is in an Estate Plan?
An estate plan includes multiple components. It functions as a living document, which means you can make updates and changes as your child gets older or as your household circumstances change. The foundation of an estate plan is a set of living documents. These documents include a health care proxy, which is a statement of who can make health decisions for a minor child if the parent becomes incapacitated. This doesn’t have to be the same person who is the health care proxy for the parent. Another living document included in an estate plan is a power of attorney. This allows a person to access funds on behalf of the child. You’ll also need a will and trust agreement, which are post-mortem documents rather than living documents.
Who Do I Choose as the Trustee?
An important decision in estate planning for new parents is choosing a trustee for the plan. The trustee handles financial matters. For example, the trustee would approve the release of funds for a child who would attend private school or take a trip. If a parent doesn’t know who to choose as a trustee, the court will appoint one on the child’s behalf. A trustee can be a lawyer or accountant, but they could also be an adult sibling or friend of the family.
How Do I Select a Guardian?
The guardian is the person you name in your will who will make all of the non-financial decisions for your child until they turn 18 years old should you pass away before then. They will be a custodial guardian and make everyday decisions as well as big decisions on behalf of your child. When selecting a guardian, you’ll want to narrow your choices down to people who genuinely have your child’s best interest at heart. Most people choose an immediate family member to be their child’s guardian. For example, an aunt, uncle, or grandparent is often named as a guardian in an estate plan.
How Much Life Insurance Do I Need?
Although many people with high income have a corresponding life insurance policy, it’s important to take a look at yours once you have a child. If you still have the same amount of life insurance as you did when you first started your career many years ago, it’s time to increase the policy’s value.
When Should I Update Beneficiary Designations?
Many people believe that after having or adopting a child, they should add the child to their beneficiary designations. However, listing a minor as a beneficiary of a life insurance policy or investment account will create more hassle and headaches. An adult would have to be appointed as a financial conservator or guardian of the account, which can take extra time.
Working with an estate planning lawyer in New Jersey will help you plan for your new child’s future. While no parent wants to think about the end of their life, having an estate plan in place will provide you with peace of mind. To get started with estate planning for new parents, contact The Knee Law Firm’s Hackensack office at 201-996-1200. You may also complete our online contact form, and an office associate will reach out to you to schedule a consultation.