Welcoming a new child into your home is always a supremely happy event. However, it also expands your to-do list to almost overwhelming proportions. With everything else you now must take care of, estate planning probably never enters your mind, let alone makes it onto your to-do list.
Kiplinger nevertheless cautions that, as new parents, you and your spouse or partner now have a special need for estate planning. Why? Because you just accepted responsibility for your new child’s personal and financial well-being, and this responsibility will last for at least the next 18 years or so.
Why have a will?
At minimum, you now need a last will and testament. Do not make the mistake of thinking that you are “too young” or “too poor” to need one or that your will deals only with who you want to inherit your assets when you die.
Your will can serve another vital function as well. In it you can name the person or people who you want to assume guardianship of your child(ren) and finish raising them if you and your spouse or partner both die before they reach the age of majority. This could be a family member, a close and trusted friend, the child’s godparent(s) or anyone else you choose. The point is, it is your choice. If you fail to make it, someone else, possibly the State of Illinois, will make it for you.
Why have a trust?
Remember, a minor child cannot own property in his or her own name. You may therefore wish to add a trust to your estate plan for the benefit of your child(ren). You can fund it with a life insurance policy payable to the trust at your death.