Are you a new or expectant parent? Here are some legal planning documents we recommend you consider having in place for your growing family.
3 Essential Estate Planning Documents
1)Will: You need a will so that, in the event of your untimely death, you will have decided what to is to be done with your assets — whether bank accounts or baseball cards — rather than leaving the decision to a probate court. When the court decides, this process eats up time and money. Instead, you want to provide legal clarity so that the focus is on using those assets to take good care of your child.
Wills are even more important in a situation where either spouse may have kids from a previous relationship. We refer to these situations in the Estate Planning industry as a “blended family”.
If a spouse were to pass away without a will that would mean they died “intestate”. When someone dies intestate their property is split up by following the state “intestate succession” laws. Click here to be taken to an article I wrote about how property passes when someone dies intestate in Missouri. I think you will be surprised as to how your property will be divided if you do not have will.
2)Guardianship document: This can be part of your will or an addendum to your will. A Guardianship document specifies who is to raise your child or children in the event both parents die. Check out my article about things to consider when choosing a guardian. Check out my article on temporary guardians here.
3)Letter of instruction: Here is your chance to philosophize about how you would like your children raised and educated if you die. Perhaps you are religious and would like your son or daughter to attend services. Maybe there are certain friends or relatives you would like to make sure they get to visit. Letter of Instructions are a great place to outline care a child with special needs may need. Just as if you were changing jobs and were leaving processes behind for the next person who will hold your position, you want to be sure that if someone has to take over the care of your special needs child you can help to make that situation smoother by having a letter of instruction.
Non-Essential Legal Planning Documents that should be considered depending on your individual situation
Trust: Trusts (also called “trust funds”) are optional, but I include them on the list because they are often intertwined with wills, and they aren’t just for rich people anymore. True, if you do have a high net worth, a trust can help you pass down money to your heirs with less taxation. But trusts have another purpose, and that is to pass your money along to your children at an age you consider appropriate.
2 Essential Non-Legal Documents easily overlooked when it comes to newborns
1)Birth certificate: This one’s a no-brainer, but there are a couple of details worth mentioning. Whether you give birth at a hospital or home, the staff or midwife should give you the forms to apply for a birth certificate. Do this promptly. Waiting for more than a year can complicate the process of getting other official documents.
2)Social Security card: The Social Security Administration recommends applying immediately at the hospital. Your baby needs a Social Security number to get health insurance, have a bank account or be eligible for government services. And you need your baby to have one so you can claim him or her as a dependent on your taxes. If you did not apply at the hospital, you can visit a Social Security office.
Non-Essential, Non-Legal items to consider when becoming a parent
Life insurance policy: If you bring a new life into the world, you should have life insurance. Life insurance is meant to replace income lost if a parent dies so that the child will be financially cared for. Life insurance can be particularly essential if one parent is staying home to care for the child and not making an income.
529 account: Start saving for education now. St. Charles County and the St. Louis Metropolitan area is known for our abundance of private schooling options. Money saved in a 529 savings account can be put towards K-12 private school education. Furthermore, if you will not be sending your child to a private institution, money invested in a 529 account is most used for higher education and trade school expenses. You can even open a 529 college savings account before your baby is born! Talk to your financial advisor to get more information about investing in 529 savings accounts.
If you do not have some of these instruments, don’t panic, and do not feel like you are a terrible parent. You are not alone in not having these prepared. In fact, the majority of parents do not have these documents in place. If you would like to learn about these instruments and how to set them in place for your family, do not hesitate to reach out to our Estate Planning attorneys today to learn about the peace of mind these documents will provide to your growing family.