Are you expecting a new baby? Congratulations! Bringing a new baby into the world is an incredible gift, but it can also be quite overwhelming. While there is certainly enough to keep you occupied during those 9 months of waiting, don't forget to start putting a plan in place should the unforeseen ever happen to you after the baby is born. But what kind of plan should you put into place? Today we'll discuss Estate Planning while pregnant and 4 tasks you should do Now!
Estate Planning While Pregnant Task #1: Create (or Update) a Revocable Living Trust
Becoming a parent is a great time to create a revocable living trust if you haven't created one already, and is one of the best tools you can use to provide a protected inheritance for your new baby, but what is it?
A revocable living trust is a trust document created by an individual that can be revised or altered over time to respond to changes over time.
A revocable trust is very flexible, which makes it incredibly useful as a parent. However, should something ever happen to you, it clearly states who will receive the property when the trust creator dies, at what age inheritance should be delivered, and what expenditures the trustee can make on behalf of young beneficiaries. They are also used to avoid probate and protect the privacy of the trust owner and beneficiaries of the trust, as well as to minimize any estate taxes.
Estate Planning While Pregnant Task #2: Designate Guardians for Your Children
When you're pregnant, the last thing you want to think about is the idea that you won't be around to raise that precious child, but it's important to consider what would happen should the unthinkable happen.
Specifically, who do you want to raise your child should something happen to you? If you do not designate a guardian for your children, the court will appoint someone. Oftentimes, they'll start by considering family members. However, do you really want a judge to determine who will care for your new baby or appoint someone that you disapprove of?
Spend this time during your pregnancy thinking about who you'd want to raise your child if you're unable, then ask that person if they'd accept the position. In some religions, this person would be given the title of "godparent." Whether or not you use a formal title, give this topic some thought.
Estate Planning While Pregnant Task #3: Consider Trustees for Minor Children
On a similar note, also consider who you want to "trust" with making financial decisions that are in the best interest of your children should you pass before your children are old enough to manage their inheritance on their own. Rather than an individual or couple that will raise your children, you are considering individuals who are honest, responsible and wise with their spending decisions.
Estate Planning While Pregnant Task #4: Update Your Life Insurance Policy
If you didn't purchase life insurance when you got married, pregnancy is a great time to do so. While a revocable living will is designed to manage inheritance, a life insurance policy allows you to provide your family with the financial resources (instead of dipping into inheritance) they need should something happen to you.
As you're considering various policies, make sure that you pay attention to coverage amounts. If you already have life insurance, now is also a good time to reconsider those coverage amounts and buy more if necessary. You should also make sure that your trust is listed as a beneficiary.
In our next article, we'll discuss 3 more tasks you do NOW as you estate plan while pregnant. In the meantime, if you haven't already, now is a good time to start talking with a a good estate attorney in Raleigh to make sure your legal affairs are in order and to ensure that your child will have the financial resources they need to get their life off to a great start.
