New parents are often overwhelmed due to sleepless nights and unexpected financial burdens to focus on the steps necessary to safeguard their children’s future in the event one or both parents pass away. We recommend new parents consider the following actions as an essential part of starting a new family.
- Name a Guardian. Every parent should nominate a guardian to care for their minor children in the event both parents pass away. In doing so, you can select the person best suited to care for your children rather than allowing the court or a state agency to decide.
- Life Insurance. If your family had to survive without your salary, would you like to pay off the house, pay for college or ease the financial burden on your spouse? Once you determine what your family’s needs will be, you can select the proper life insurance coverage to meet those goals.
- Beneficiary Designations. If you have an IRA, 401k, life insurance or other beneficiary-driven asset, the beneficiary designations should be updated to ensure that these assets are available for your children rather than another person whom you may have designated before you had children.
- Establish a Trust. New parents should consider establishing a revocable living trust to hold and manage the assets (including those discussed above) for the children. By doing so, you can avoid unnecessary probate and guardianship proceedings and limit access to the trust assets until your children are old enough to handle this responsibility.
No parent wants to imagine their children growing up without them. However, with proper planning, you can avoid many unnecessary financial and emotional hardships that would otherwise occur in an already difficult time.
Parman & Easterday