When you become a parent, just about everything in your life changes. You have probably already made some adjustments, such as opening an education fund or moving to a larger house.
While you are at it, do not overlook the importance of estate planning. Older adults are not the only ones who should be thinking about end-of-life plans. Regardless of your financial situation, as a new parent, you should prepare a few key estate planning tools.
Will and trust
Your will designates who inherits the property you leave behind. This property may include money, real estate, vehicles, family heirlooms and other items.
As a parent, the most important function of your will is naming a guardian for your children. Their guardian is the person who will take over the responsibilities of raising them. You may also specify a different person to distribute the children’s funds in a manner appropriate to their ages and maturity levels.
In addition to a will, you may want to set up a trust. Doing so may offer tax advantages and allow your heirs to skip the probate process.
A living will lets loved ones know what medical care you want to receive under certain circumstances. Also called an advance directive, this document communicates for you in the event of terminal illness and incapacitation.
The legal form seems simple, but the decisions can be complex. Make these choices now so your children will not need to do so in the future.
Business succession plan
If you are building a business or working in a family firm, you understand how important a succession plan can be. Your business, your family name and your legacy may depend on you, so create a well-thought-out estate plan. Your plan may include provisions for training successors, delegating authority or transferring ownership. A solid plan can also have tax advantages.