Even the most careful planners are bound to forget something when it comes to welcoming a new member of the family. There is simply too much that needs to be done. Of course new parents are going to overlook something.
Unfortunately, one of the most commonly overlooked items is one of the most critical for protecting a child: creating an estate plan.
"But Our Estate Isn't That Big"
One common misunderstanding is that estate planning's only role is to dictate how assets are passed on. As Forbes points out in an article about financial issues for new parents, estate planning is not just about protecting your assets.
Yes, it can protect the family home and everything you have earned, ensuring they benefit your child in the future. However, for new parents, the most critical aspect of an estate plan may be ensuring that a child is cared for in the event that parents pass away or become incapacitated.
In your estate plan, you will be able to name a legal guardian for your child. If you do not do this and the unthinkable happens, state law will dictate who will care for your child, and it might not be the person you want it to be.
"But We Are Young And Healthy"
Nobody wants to think about the possibility of their lives ending, regardless of age. Nonetheless, the possibility exists, and when there are children whose care and comfort hang in the balance, it is important to plan for this unlikely event. Furthermore, estate planning can also address what will happen after an incapacitating illness or injury.
Estate planning is not something to be afraid of. It does not have to be a complex, time-consuming endeavor. Additionally, it should not be seen as a one-time-only process, particularly for new parents. Estate plans are living documents that can be updated as the family grows and life changes. Although taking the first step can be daunting, the peace of mind that it offers to new parents is well worth it.