Estate Planning for Expecting Parents
So you’ve gone from bachelor(ette), to the perfect (or not-so-perfect) married couple, and now the perfectly prepared expecting parents. You’ve read all the baby books you could find, and after hours of research, you have purchased the perfect stroller, crib and car seat. You’re ready! Or are you?
Expecting parents often overlook the need for financial and estate planning for their family. Understandably, it is not the most enjoyable topic. But what happens to your newborn if something were to happen to you and your spouse? Do you have life insurance to cover the cost of raising your baby? Would both sides of the family agree on who should care for your baby? Even if that meant the ability to control your baby’s life insurance proceeds? Tough questions, but even tougher if you leave it to your family to decide.
When my wife and I learned that we were expecting our first child, we realized that taking care of ourselves were no longer the only priorities. Before kids, we had some concern about caring for each other if something were to happen to one of us, but we were both working and fully self-supporting, so it was much less of a concern. The same could not be said about our soon-to-be newborn. Expecting parents have many additional expenses when it comes to preparing for a child to come into this world, but life insurance and a solid estate plan should not be overlooked.
Estate planning for expecting parents requires at least two major decisions:
- Who will care for your child if you and your spouse pass away?
- Who will control the assets that you are leaving to your child?
For some, the answers to both questions may be same person or the same married couple. For others, you may have one family member who is a great parent, but horrible with money, so you may choose one person to take care of your child and one person to manage your child’s assets. There are several other variables to consider. What happens if the person you choose is also deceased? What happens if the person you choose is no longer married? If you do not have a well prepared estate plan, these decisions will be left to the Court to decide. Do you feel comfortable with a judge making these decisions for you with little to no information about your child or family?
Without proper estate planning, the appointed guardian will have to report his or her spending to the Court on a regular basis. While initially this may seem like a good thing, the guardian will need to hire an attorney to help with the reporting. The cost to hire an attorney will come from your child’s funds and deplete the estate you leave to your child. Proper estate planning is likely to cost less than a single year of reporting to the Court should something happen to you.
The benefits of estate planning go far beyond these two issues, but these are often the most important issues for expecting parents. Other benefits of estate planning include:
- Avoiding Probate
- Avoiding the payment of estate taxes, income taxes and property taxes
- Avoiding or minimizing family disputes
- Protecting your child from divorcing spouses
- Asset protection
Experienced Orange County Estate Planning Lawyers for Young Families
As parents of a young child, we understand the concerns of parents raising children in this generation. As Experienced Orange County Estate Planning Lawyers, we have the knowledge and understanding to guide young families through these complicated and often overlooked issues. To that end, we believe in drafting custom estate plans that not only protect your children, but also save you legal fees and taxes later.
Life Insurance for Expecting Parents
Every family is unique, but for many parents, even if both parents are working, caring for a child in a way that you are accustom may be difficult with the loss of even one income. Life insurance is a way to supplement the loss of income if something were to happen to one or both of you. Depending on your situation, life insurance may be needed for only one spouse, for each spouse, or only after both spouses pass away. For example, if one spouse is the bread winner, you may only need to insure his or her life. If both incomes are necessary, you may choose to get insurance on each spouse’s life. If either spouse can fully support the family, then insurance may only be needed if something were to happen to both of you (a second-to-die policy). There are several other life insurance options to choose from, so you should discuss your specific situation with your financial advisor and estate planning attorney.
Schedule a Consultation
If you are an expecting parent, or if you have young children, estate planning and life insurance should be an important component in your family’s overall protection. To learn more about how estate planning can protect you and your family, call us at (949) 371-5003 to schedule a free consultation.
John Wong advises on all aspects of estate planning, probate, asset protection and trust administration. He believes that estate planning is about planning for life; while having protections in place should the unexpected occur.
