A brand new baby brings a special kind of chaos to your home which is called financial planning for new baby. In the midst of sleep deprivation, midnight feedings, and seemingly endless diaper changes, estate planning is likely the last thing on your mind. And yet, making an estate plan is a relatively simple task that can bring an immense sense of security to your growing family. Here are the basics:
Your first order of business is to choose a guardian for your baby. For most parents, this is the toughest step in the entire process; however, it may also be the most important.
A guardian is the adult you name in your Will to take responsibility for your child in the event your child is orphaned before he or she reaches adulthood. You name your child’s guardian in your Will. If you do not have a Will when you die, a judge will appoint a guardian for your child. The problem with this scenario is that the person appointed might not be the person you would have chosen. Without your input, the judge would love to make the decision without your guidance.
So, how do you choose a guardian? It can be helpful to sit down and make a list of your most trusted family members and friends, then narrow your choices based on factors such as:
- Parenting Style
- Religious Beliefs
- Educational Philosophy
- Current Family Size
For many parents, it is helpful to remember that the decision you make does not have to be permanent because, let’s face it, circumstances change. For example, the guardian you choose when your child is an infant might move away by the time your child is in elementary school, or you might rethink your choice and settle on someone more suited to your child’s emerging personality. You can always update your estate plan to designate a new guardian.
After you’ve settled on a guardian, you’ll want to take two additional steps. First, discuss your thoughts with the potential guardian before you make your Will. You’ll want the person you choose to be prepared, willing, and able to take on this important task if the need arises.
Second, make sure the potential guardian has enough funds to care for and educate your child. Many young families find that the best way to accomplish this is with life insurance. And lastly, one of the most important ways you can plan for your baby’s future is to plan for your own and keep the following in mind when creating your complete plan.
Revocable Living Trust
A Revocable Living Trust is the cornerstone of many people’s estate plans. This flexible planning tool covers a number of scenarios. For example, a Revocable Living Trust lets you maintain maximum control over your assets while ensuring your finances are protected in case you become disabled. It also allows you to provide security and support for your loved ones after your death. One benefit of a Revocable Living Trust is that it allows your loved ones to inherit from you without the need for probate, its expense, delays, and publicity.
Financial Power of Attorney
A financial power of attorney is a disability planning tool that lets you choose a responsible person – known as an agent – to manage any assets not included in your Revocable Living Trust.
Healthcare Power of Attorney
With a healthcare power of attorney, you can choose an agent to make medical decisions on your behalf. This planning tool ensures that a trusted friend or family member has the authority to direct your medical care if you are too sick or too severely injured to make decisions on your own.
The Health Insurance Portability and Accountability Act (HIPAA) is a federal law designed to protect the privacy of your medical information. The law prevents unauthorized people from accessing and viewing your medical information. A HIPAA Release lets you name the individuals who should have access to your medical information.
As soon as you emerge from the baby fog, get in touch with an experienced estate planning attorney. He or she will tailor a plan just for your family so that you can relax and enjoy your journey as a new parent with peace of mind.