Taking a positive pregnancy test or hearing the news from your partner can be a very exciting or frightening moment. Even when it is an intended and wanted pregnancy, the impending reality of parenthood means making some big choices about your lifestyle and your finances.
You also have to make some changes to your long-term plans for the protection of your partner and the child that the two of you will have together. Estate planning is something you can no longer put off when you find out that you are about to become a parent.
Your child needs your protection
Even before they are born, your child depends on you. You can help ensure that they have their needs met regardless of what the future holds by putting together an estate plan that focuses on their care. You can’t assume that other people will step up to protect your child if anything happens to you. You also likely don’t want to leave their inheritance to chance and state law.
A will is the most common means of appointing a guardian to take care of your child if something happens to you. You can also set some property aside for your child to inherit in addition to what they may receive through intestate succession law.
You can complement those resources with life insurance. However, your will is not where you designate the beneficiary of your life insurance. You will need to make those changes with the company directly.
For some parents, a trust is also a necessary tool
Even if your sibling or best friend has agreed to serve as the guardian for your child, you want to protect them by leaving resources that can help them when they are 18 and can no longer depend on a guardian for financial support. Creating a trust is probably the fastest and most effective way to preserve certain resources for your child. Instead of risking their inheritance by leaving it under the control of a guardian, you can set some assets aside until your child turns 18 and can access the trust.
Thinking about what your child will need in the future can help you create an estate plan that more effectively protects them.