There are not as many exciting life events as bringing a child into the world. When this happens, there are several things new parents must put in place to care for their new bundle of joy properly. One of these is creating or updating an existing estate plan.
Estate planning, at its most basic, is the process of documenting how your assets will be distributed upon your demise. And there are several tools involved in the estate planning process. Two of these are wills and trusts.
Here are two estate planning actions you need to take after receiving a baby.
Create or update an existing will
A will is certainly one of the most important estate planning documents you can ever make. Besides protecting you and your estate, a will also protects your children. Without one (dying intestate), the government will have to determine what becomes of your assets.
Additionally, a will allows you to designate a guardian for your children. This is the person who will assume legal responsibilities over your minor children should you pass on or become incapacitated. Again, without a will in place, this enormous responsibility will be taken up by the government.
Create a trust for your child
A trust is an estate planning tool that allows you (the trustor) to designate a third party (the trustee) to hold title to specific assets on behalf of a beneficiary. By setting up a trust with your minor child as the beneficiary, you will be ensuring that they have immediate access to the trust funds should something happen to you. Better still, a trust gives you greater control over how your beneficiary will utilize assets in the trust fund even after your passing.
Becoming a parent comes with a whole new level of responsibility. Find out how you can update your estate plan following the birth of a child.