Few things are likely to make you both happier and busier than welcoming a new baby into your family. Between feedings, naptimes and diaper changes, you should find some time to think about your child’s future.
If you have not yet drafted an estate plan or have not reviewed your existing one recently, estate planning should be high on your priority list. Here are three estate planning tips for families with new babies.
1. Purchase a life insurance policy
The cost of raising a child until he or she turns 18 is currently $233,610. This figure, of course, does not include higher education, which may be as much as $50,000 per year. If either you or your spouse dies unexpectedly, you want to be sure your family has the financial resources to care for your child. Purchasing a life insurance policy gives you peace of mind.
2. Designate a guardian
If both you and your spouse are unable to raise your child, you want a responsible person to do it for you. In your will, you can designate a guardian for your son or daughter. Doing so may also keep your relatives from fighting over custody.
3. Set up a trust
You probably want to leave some of your assets to your new baby after your death. If you die before he or she becomes an adult, though, your child may not be able to take ownership of his or her inheritance. By setting up a trust, you maintain some control over when and how your son or daughter accesses your assets.
A special needs trust may also allow you to set aside funds for a child with disabilities without disqualifying him or her from public assistance. Ultimately, though, regardless of whether a trust is right for you, creating a comprehensive estate plan is likely in the legal and financial interests of everyone in your family.