New parents have a lot of things to think about, as the responsibility of having a new baby doesn’t end with making sure that the little one is healthy. For example, if you have an infant, now is the time for you to think about your estate plan. You can take advantage of various tools to build the strongest future for your child’s needs, especially after you are gone.
While estate planning might not be something pleasant to think about, it’s one of the best ways you can take care of your child. There are several factors to examine as you’re considering how to set up your estate to benefit your new baby. At Towson Law, we are here to guide you through each step and help you as life brings new challenges.
Reviewing Your Assets and Your Child’s Needs
Your first step in building an estate plan is assessing what you have, what you expect to acquire, and what your child will need. If you already have many assets, your estate planning lawyer can help you understand documents such as wills and trusts to protect those items now and after your death. If you are starting a business and expect significant growth, you may need estate planning tools that grow with your holdings.
In some instances, a child may have special healthcare or living needs. While you can address these as parents, a strong estate plan allows you to prepare the way for your offspring if you pass away unexpectedly. If your child will always depend on others for nursing or everyday guidance, you can establish plans so they have financial independence as adults long after you are gone.
Estate plans are for everyone, even if you are young. By closely examining your current and future situations, your estate planning attorney can advise a plan and help you adjust it as needed. They can also help in the event of divorce so that each parent maintains an appropriate estate plan for the couple’s children.
Naming a Guardian for Your Child
One of the most important things that your estate plan will do is state who you want to raise your child if you and their other parent both pass away. You should name someone who shares your values and will uphold those while raising your child. They should have the ability to care for your children.
It’s a good idea to discuss your wishes with the person you want to raise your children with, in case something happens to you. This is a chance to be sure they’re comfortable taking on the responsibility and that they’ll take good care of your child. You should include appropriate details about any financial arrangements you’re making to provide for your child and their guardian.
Parents can protect their children against the risk of foster care by choosing a guardian and designating authority to them in their estate planning paperwork in accordance with Texas law. A guardian can fulfill a parental role, and taking the time to choose a guardian can make a big difference for a child who has just experienced a very traumatic loss.
Providing Resources for a Child
Parents who die early in life won’t be able to develop their careers fully and provide indefinitely for their children’s needs as they might aspire to do. It can be hard to face the uncomfortable truth that you must make plans for your children’s financial stability if you pass away in the near future. When you take the time to do so, you are giving your loved ones a great gift.
Common ways you could take action in this area include:
- Purchase life insurance for yourself: If you haven’t already, buy a life insurance policy with enough to supply at least one year’s income for your survivors and pay for your final expenses.
- Buy a life insurance policy for your child: Although it’s grim to contemplate, losing a child to sudden injury or illness can bring serious financial trouble, from paying for the funeral to taking time from work to grieve.
- Create a trust: As part of your total estate plan, a trust that provides for the child’s care until they reach adulthood means they aren’t left wanting. It can also slowly give them control of larger financial holdings as they gain maturity.
- Establish your beneficiaries: Until your child is 18, it’s wise to set adults (such as your spouse or another trusted party) as the beneficiaries for your life insurance and retirement accounts. You can adjust the names when your child is old enough or in the event of divorce.
- Pay for your funeral in advance: Not only can you potentially save thousands by paying now for something that may not happen for decades, but you also take the burden off your family members of covering a significant cost in the midst of their mourning. Doing so also avoids adding debt to your estate.
By putting your wealth and other assets into trusts, you can also limit what has to go through the probate process. Probate is required to account for and transfer any assets that belong to you when you pass away. By creating an irrevocable trust, you give ownership to the trust as a separate legal entity, meaning the assets immediately belong to the beneficiaries instead of being taxed by the government as part of your estate.
Providing Guidance in the Wake of Tragedy
If you are a victim of a sudden injury, such as a car crash, you could be incapacitated. Your estate planning paperwork can provide important information for your children and spouse. These documents should contain details about your medical wishes, such as life support preferences or whether you want to donate your organs.
This is sometimes one of the most unsettling parts of building an estate plan, but making your choices while you are younger and in full control of your faculties means your loved ones don’t have to guess what you would want. By using advance directives, medical powers of attorney, and other forms, you and your spouse can put these critical choices in the hands of those you trust.
The estate planning process can be an emotional one, but as parents, it will give you peace of mind. It also provides important forms of protection for your children and their guardians. If you recover from your injuries, you can resume caring for your offspring, but in the event you pass away, their needs are covered.
Solidifying Financial Security for Your Children
One of the primary things you may worry about is making sure your children have financial security when you die. Unless you take preventative measures by creating an estate plan that clearly defines your wishes, your estate will fall under Texas descent and distribution law. While many parents wish to divide things equally among their heirs, this may not be the case for you, requiring specific instructions beyond state law.
Creating a trust for your child is one of the primary ways of protecting your funds and ensuring they are distributed correctly. You will choose a trustee who maintains the trust with the beneficiaries’ best interests in mind and distributes money according to the trust’s terms. For children with special needs, you can create a trust that addresses their educational and healthcare requirements.
You must also take care that your savings, checking, and retirement accounts will transfer into the child’s name once they are old enough or into their legal guardian’s name if they are minors when you pass away. By creating a Totten trust, all accounts you include become payable on death (POD), giving the guardian the ability to pay bills and handle your children’s care needs immediately.
When Should You Begin Estate Planning for Your Child?
The answer to this question is, “As soon as you know you will have a child.” Whether you are expecting or in the process of adopting a child, you should meet with an attorney to start creating your estate plan. By considering what you want for your child’s future, you can have invaluable peace of mind knowing you’re doing what you can to care for them no matter what happens to you.
By writing your will and assigning personal assets, such as jewelry or artwork, you can solidify family legacies for treasured items. If you have inherited a home or other property from previous generations, your plan can clarify who will receive it when you pass away. Even if you die when your children are young, you will protect their future from uncertainty when you take the time to meet with an estate planning attorney.
Although it can be a difficult time, another smart place to create an estate plan is just after a divorce. It can be critical to clearly state where your assets should go. You can also name a guardian to represent your child’s interests in case the relationship with the other parent is challenging.
Let Us Help You Build a Future for You and Your Children
At Towson Law, we know that you want more than a family lawyer who knows Texas statutes. You want someone who cares about you and your loved ones, tailoring an approach that addresses your needs with honesty, respect, and compassion. We believe we are the right choice for you when you are ready to create an estate plan to care for your young children.
We are confident you will feel ready to move ahead with us when you arrange for a consultation at your convenience. You can get answers to all your questions and learn more about which options may be best for you and your children. We listen to your story and explain what we can do in clear language so you can make well-informed choices.
No matter where you are as a parent, take a moment to contact us and schedule a review of your circumstances. At Towson Law Office, PLLC., we are dedicated to the future and welfare of your entire family. Put your trust in us and get started with an estate planning attorney today.