If you and your spouse or partner have been blessed to welcome a new child into your family this year, now is the time to establish an estate plan. Why? Because as Kiplinger reports, your plan not only provides for the financial security of your child now, but also in the future.
Every state holds a child’s parents financially responsible for him or her until he or she reaches adulthood. Obviously, that represents a long-term commitment on your part. Since you cannot foresee what the future will bring, you need to plan now for any eventuality.
Last Will and Testament
For most people, their Last Will and Testament represents the foundation document of their estate plan. If you think only rich people need a will, think again. Your will not only sets forth who you want to inherit from you when you die, and in what amount, you can also use it to specify who you want to finish rearing your children in the event you and your spouse or partner die before they reach the age of majority. Keep in mind that you can always change your will in the future if you change your mind about who you want to perform this all-important function.
While your will serves as your estate plan’s foundation document, it does not need to be your only document. For instance, you may wish to add one or more of the following:
- A medical power of attorney
- A special needs trust to benefit your special needs child(ren)
- An insurance trust, funded at your death by your life insurance proceeds, for the benefit of your child(ren)
Once in place, your estate plan should give you peace of mind knowing that you have provided for your children to the best of your ability.