3 Estate Planning Baby Steps
When a baby is on the way, it is a perfect time for expectant parents to complete or update their estate plan to ensure their child’s future care. Some families do not consider the peace of mind a comprehensive estate plan offers until their baby is born. However, during the nine months parents-to-be are decorating a nursery or scheduling routine prenatal visits with their physicians, they can also add meetings with a North Carolina estate planning attorney. There are short-term and long-term events that parents can plan for to prevent court costs, legal fees and wasting of assets, plan for college costs, and secure their baby’s care in the event both parents die or become incapacitated.
- Trusts. Structure assets so that they are preserved for the child when they reach a certain age. Trusts allow parents to protect property and allow for its careful use for the children while ensuring assets are distributed according to their wishes. Establishing a trust will also prevent assets from being tied up in a lengthy North Carolina probate, saving time and money.
- College savings. Starting a college fund early and maintaining regular funding is the key to success. 529 College Savings Plans allow parents to benefit from tax-free growth for funds used for qualified higher education expenses. Anyone can open a 529 account, which means if parents are unable to create one when their baby is born, they can include instructions to future guardians to fund contributions from life insurance, for example.
- Choose a guardian. The process of choosing a guardian should include consideration of the potential guardian’s financial habits, physical state of residence, health and lifestyle, and their religious beliefs. These elements will directly influence the child’s future. North Carolina guardianship for a minor begins after parents are unable to care for their child and terminates when the child turns 18. Guardians are generally designated in a Will, so that parents who die without a Will lose the opportunity to make this important decision.