For new parents, developing an estate plan can seem like a daunting task. Where do you even begin to make sure that your little ones are taken care of if the unthinkable happens? The four special considerations below provide a good starting point for parents of young children who are ready to get their estate plan in order:
1. Appoint a guardian in your will to take over parenting responsibilities in the event that you and your children's other parent pass away. Although this is typically the hardest decision for parents to make, a court will choose an individual to take over if you fail to name a guardian on your own.
2. Select a trusted individual or financial institution (a trustee) to handle your assets on behalf of your children if you pass away while they are still young. This could be the guardian you have appointed, or you may choose another individual to act as trustee if you prefer to keep powers separate.
3. Choose an age or life event or achievement at which time you would like your children to receive your assets outright without the involvement of a trustee. Many parents prefer to withhold outright distribution of assets until children exceed college age, but distribution could also be contingent upon milestones such as graduation, marriage, or purchase of a home.
4. Check your listed beneficiaries on life insurance, retirement, and other types of accounts to make sure your primary and alternate beneficiaries are up to date. Any such beneficiary designations will occur automatically upon your death and will trump gifts made in your will.
If you take the time to think through these four considerations, you are well on your way to making sure your children are taken care of by your estate plan.