Are you a new parent, or a parent again? Congratulations on the new addition to the family!
If you haven’t noticed, a baby complicates life.
It is a welcome complication, but a complication no less.
I don’t know about you, but when we had our first newborn, I was sleep deprived, anxious, and overwhelmed.
Something that hit me, something that I never thought about in the past, is the thought of “What if something happens to me? Who will take care of my family?”
Life may seem too hectic to think about adding additional activities onto the to-do list, but now is a very good time to set up, or update, your Will or Trust. Often, what holds us parents back from creating that Will is not knowing what we need or should consider.
With that in mind, here are a few pointers on what to do:
Create a Will.
For most young parents, writing a Will is more about nominating guardians for your kids than it is about leaving financial assets. The guardian you name in your Will is the person who would raise your minor children if both you and the other parent were unavailable to raise your children. That is unlikely to happen, but worth addressing.
Without a Will, the court would choose a guardian without any guidance from you. A common choice is a family member. But, what if you really don’t want certain family members to raise your children? Or, what if you would prefer a to nominate a close friend as guardian because she has a has the same value and life interests that you would want to impart on your kids? Without a Will, the court wouldn’t have any way of knowing that.
Many, many parents get stuck when they go to choose a guardian—after all, it it no fun thinking about someone else having to raise your kids. And parents sometimes discover that they disagree on who would be the best option as guardian of their children. Read this post for help with this very important conversation.
Get Life Insurance.
Most new parents are young, and typically, young people do not have a ton of assets. But, what they tend to have is great health. Great health tends to make life insurance extremely affordable.
Buying a Term Life Insurance policy can replace your income for a period of time. This income replacement offers some available cash to your spouse for child care, education costs, and supporting the family. If both spouses pass away, your policy can go toward the cost of raising your kids. 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.
Life insurance policies, retirement accounts, bank accounts, brokerage accounts, and other assets held by an institution typically have beneficiary designations. If you update your Will or Trust, you should ensure 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! Your new little one, who 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. The 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, you 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 an urgent 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 in the event 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! Visit https://calendly.com/idahoestateplanning to request your complimentary consultation now!