Congratulations on the new addition to the family! As you have probably noticed, a baby complicates life. It is a welcome complication, but a complication no less.
You are sleep deprived, anxious, and overwhelmed. Something that has probably hit you now, if it had not in the past, is the thought of “What if something happens to me? Who will take care of my family?” A new form of anxiety! Yay!
On top of all the hectic activities in your life, now is a good time to set up, or update, your first Estate Plan! Often, what holds parents back is not knowing what they need or should consider. Here are a few pointers on what to do:
Create a Will.
For most young parents, writing a will is less about leaving their assets than it is about naming guardians for the kids. The guardian you name in your will is the person who would take over if both you and the other parent were unavailable to raise your children. That’s very unlikely, but worth addressing just in case.
If your children ever needed a guardian, a probate judge would appoint the person you nominated in your will. You can name backup guardians just in case they are ever needed.
If you haven’t created a will the court would have to choose a guardian without any guidance from you. The common choice is a family member. But what if you really wouldn’t want certain family members to raise your children? Or what if you would prefer that a close friend, who has a good relationship with your kids, step in as guardian? The court wouldn’t have any way of knowing that.
Many, many parents get stuck when they go to choose a guardian—after all, no one likes even thinking about someone else raising their children. And parents sometimes discover that they disagree about who would be best. Read this post for help with this very important conversation.
Get Life Insurance.
Most young parents are, well, young. Typically young people do not have a ton of assets. But, they tend to have great health, which makes life insurance extremely affordable. Buying a Term Life Insurance policy can replace your income for a period of time and either allow some available cash to your spouse for child care, education costs, and supporting the family. If both spouses pass away, your policy can go towards to cost of raising your minor child. That way you can focus your guardian conversations around who would love your child the most, not how much money someone has.
Update Beneficiary Designations.
Make sure that your beneficiary designations are up to date on life insurance policies, retirement accounts, bank accounts, or other beneficiary-designated assets, and that these designations match the intent of your will. Contact your financial advisor, or request a change of beneficiary form from the institution you work with, to make this free update.
Take Advantage of Your New Tax Exemption.
Yep that little one that costs so much money, can actually save you some cash in the tax realm. First off, you need to apply for his or her social security number. Quickest way to do this is when you are applying for child’s birth certificate. Without delving to much into the tax world, new parents can anticipate potential tax savings associated with; Dependency exemption, Child Tax Credit, Earned Income Credit, Child Care Credit, and for single parents might be eligible to file as Head of Household. This is not tax advice and you are encouraged to speak with your Tax Professional to see if, and how, these potential credits might be available to you.
For parents, just the idea of making a will can be overwhelming. We are busy and it’s not always a top priority to plan for the unthinkable. However, creating an estate plan is the most important thing you can do to make certain your child is cared for if anything should happen to you. A will can provide certainty and security to your family by naming a guardian for your child and secure the benefits you wish for those you love.
Jeppesen Law has created the New Parent’s Package to custom tailor an Estate Plan specifically for you courageous new parents! Call 208-477-1785 to schedule your free consultation now!