Becoming a parent is a huge life change. Shortly after your child is born, you and your spouse will spend most of your time on the never-ending tasks of feeding and diapering a newborn, as well as surviving some sleepless nights. One thing new parents often don’t think of in those early months is establishing an estate plan—so your child will be taken care of if you and your spouse suddenly pass away.
While the scenario of your child becoming an orphan is unlikely, most parents want to ensure that there is a plan for their child if it happens.
Guardianship
One part of a new parents’ estate plan includes naming a custodial guardian for their child. A custodial guardian will raise your child in your absence—being responsible for providing food, shelter, clothing and guidance. If parents have no will and no named guardian for their child, the courts will appoint a guardian for the child.
Parents should think about who will raise their children well, with the same values or religious beliefs as they have. They also should consider where a guardian lives, how close the guardian lives to other family members and how a child will fit in if guardians have other children.
Financial trustee
Parents also should choose a financial trustee for their assets. This is someone who will make financial decisions about how to spend any money your child will receive from your estate. Often, new parents establish a trust for their child that the financial trustee manages. Sometimes, the financial trustee is the same person as the child’s named guardian. Sometimes, it’s a good idea to name co-trustees to ensure they work together to manage any money left to support raising your child.
Executor
Also, as part of estate planning, parents should name an executor of their will. This person will pay any estate debts and distribute any assets according to the will.
Health care proxy/power of attorney
The other document that is an important part of a new parent’s estate plan is legally naming someone as a health care proxy or power of attorney, should you become incapacitated before your child becomes 18. The person named as your health care proxy will make decisions about your care. If they are your power of attorney too, they will have access to your finances to help care for your child.
Estate planning is never an easy task. But as a new parent, drafting a will and setting up a trust for your child, as well as completing other estate planning documents, will give you peace of mind. You will know that no matter what happens, you have done your best to care for your child well.
