Northern Beaches Mums Group
Northern Beaches Mums Group

Estate Planning 101: 5 Things New Parents Need to Know

For new parents, it’s normal to feel as if the days are so short and the nights, long. There’s so much to do, yet so little time: the chores, getting back to their jobs, taking care of a newborn, and everything that comes with it. In between the mountains of diapers and laundry to go through, it can be easy to forget some of the essentials, like applying for health insurance policies for your child and estate planning, to name a few.

Today, the focus is on the latter. While many might think that estate planning is for the elderly who have amassed quite a significant number of assets, estate planning and the creation of online wills should be started even while you’re young, and more so now as new parents. No one can tell what the future will bring, so it’s a prudent move to have that plan laid out, for the sake of your children.

With that being said, here are five things new parents have to know about estate planning.

1. One of the most important parts is Naming a Guardian

You’re still in the newborn phase. This means there’s a long way to go before your children can stand on their own feet. Parents, however, aren’t immune from the uncertainty of death. If this comes at a time when the kids are still minors, to whose care are your children going to be in the hands of?

One of the most significant parts of an estate plan is naming a guardian for your minor children in your absence. This gives the courts a clear directive, so there isn’t any dispute as to where the children will belong.

This process of naming a guardian is very useful, especially if, for instance, you’re a single parent, or both parents, unfortunately, pass when the children are still minors. Should anything happen to you, you have that assurance that your children are going to be in good hands, as they’ll be under the guardianship of the individuals you’ve specifically named as people you trust for your child’s best interest.

2. Buying a Life Insurance Policy as one of the attachments is necessary

A life insurance policy is another important component of an estate plan. Raising children can be expensive, so if anything happens to the parents, the guardian will need money to cover the children’s expenses, from their education, medical expenses, and other necessary living expenses. This is where a life insurance policy comes in.

The insured individuals should be the parents with the children named as the beneficiaries. If the children are still minors at the time of their parent’s death, then the proceeds of the life insurance policy will be held in trust for the beneficiaries, with a specific trustor named as well.

There are so many technicalities involving this process, so a financial advisor and a reputable life insurance provider will come in handy. Choose the policy wisely so you’re certain you get the best coverage for the most reasonable price.

3. Naming an Executor is a must

So, the estate plan is made and is ready. When you die, the question remains: who’s responsible for executing the estate plan? This is where naming an executor comes in.

Having a specific executor named also removes any cloud with the courts as to who will execute your estate plan. Like the guardian of your children, the executor is also someone you trust.

If an executor isn’t named, the court has to name an appointed administrator. It’s then the judge who will give the administrator directives on how to divide your assets.

4. An Estate Planning Lawyer is the best professional to help you out

New parents have so much on their plate to learn. Parenting will come naturally, but not learning about legal documents, which involve so many technicalities, else the validity of your estate plan will be questioned.

This is where an estate planning lawyer comes into the picture as the best professional to help you out. As their name suggests, they’re lawyers who specialize in estate planning. Hence, you can rely on your lawyer to come up with the most detailed, valid, and accurate estate plan for your family.

5. Checking your Retirement Account is also a plus

Depending on the national and state laws of the country you’re reading this from, some legally require employers to provide employer-sponsored retirement accounts. That retirement plan forms a significant part of your estate, so be sure to check that one out, too.

Ideally, you’ll want your spouse to be the beneficiary of your retirement plan. That way, they can manage the money for the family. Alternatively, you can also set it up in trust for your children if you’re a single parent or worse, if you want to prepare for the unlikely (but possible) happenstance of both parents dying early.

Conclusion

Overseeing the life of your child from that newborn phase today and up to their adulthood when they can finally fend for themselves consists of a vast expanse of challenges. Estate planning is only one of those necessary legal processes, but also one of the most important. The information you’ve just gathered should convince new parents even more about why it’s a must-do process, one best done with the help and advice of an estate attorney you can trust.


Luigi Khalid is a financial advisor, specifically working with new parents to walk them through the estate planning process. He’s also simultaneously completing his law studies and is now in his fourth year. Estate planning for new parents is something he’s so passionate about, as he also speaks from experience, being a young father of two little boys himself, one aged two and the other, a newborn.