What can new parents include in their estate plan?
According to the North Carolina State Center for Health Statistics, over 17,800 babies were born in the three major counties of the Triangle during 2012. How should parents update their estate plans for new babies?
One critical item parents should create or update when they are expecting a child is their Will. Who will be the guardian of the child in the event the parents predecease the child? Discuss guardianship laws in North Carolina with an estate planning lawyer and talk to the individuals who you are considering as guardians. Name a secondary guardian in the event your primary choice declines or is unable to fulfill the responsibilities for other reasons. A trust for minor children should also be created in the Will.
Parents may also consider documenting their values in a Will. Philip Seymour Hoffman’s Will is a high-profile example of a parent preserving their cultural values for their children.
Google recently reported that an analysis of Internet search histories of parents-to-be included high searches for college savings. Parents are thinking far ahead, and some are creating College Savings Plans before their children are born. Ask a financial advisor about starting a 529 College Savings Plan, which grows tax- free if distributions are used to cover qualified education expenses.
Beneficiary designations for life insurance and retirement accounts should also be updated to provide for payment to a trust for children (usually in a Will or living trust). This will avoid court-supervised guardianship for the funds and protect the assets until the child reaches the age of majority, or beyond.
For expectant mothers, getting a life insurance policy after the first trimester is more expensive than doing so earlier. Fortunately, the premiums may be less after the baby is born. According to Forbes, the reason for the inflated cost for women further along in their pregnancy is the likelihood of developing gestational diabetes.
Recommended posts for new parents in North Carolina:
If parents-to-be are not married, read our post about estate planning for cohabitating couples. A North Carolina estate planning attorney can recommend legal documents that can provide protections and authorities for unmarried couples that other couples usually have through marriage.
If a new baby is a step-child, read our Chapel Hill estate planning lawyers’ post about step-children in estate planning so that you can ensure assets pass along to children according to your wishes.