For many young professionals and new adults, the main focus of their first estate plan will be protection for themselves. Advanced directives and powers of attorney help ensure that you have someone you trust to advocate for you and manage your affairs in an unforeseeable emergency. You may have a will if you have any property to your name, as well as beneficiaries designated for your life insurance policy if you have one.
Once you have a child on the way, your estate planning needs change significantly. You need to make some major adjustments to your estate plan to help protect your children who will depend on you entirely in their early years of life.
You need to name a guardian
Most parents get to be there to watch their children go through school and graduate, but not all parents are there when their children become legal adults. Whether you develop an aggressive form of cancer or have a tragic accident at work, the risk is there that you won’t be around to support and provide for your children until they become adults. You need to name someone to take that responsibility and discuss that decision with the person you choose.
Life insurance will become more important
You may previously have only carried enough life insurance to cover funeral costs or to pay off your student loans, but what life insurance needs to accomplish is different once you have dependent children.
You need to think about covering their basic costs of living expenses or even helping to fund a savings account for college costs. You may want to review your insurance and increase how much you carry. You will also need to reconsider your beneficiary designations to make sure they align with your estate plan.
You may need to consider a trust
Trusts aren’t just for the wealthiest families. They are beneficial for anyone who wants to ensure that the resources they leave behind when they die achieve specific goals. A trust can preserve assets until your children come with age themselves. You can also limit the reasons why the guardian caring for your children accesses those resources.
Thinking ahead about what your children will need if something happens to you can help you update your estate plan to optimize the protections they will have in a tragic situation.