How Parents Should Plan Their Estate after the Birth of a New Child
Bringing a new infant into the world is one of the sweet joys of life. The immediate focus for most parents is sharing the joy with family and friends and bringing the child home. While it’s easy to focus on new clothes, a crib, sleeping schedules, and the daily care of the child – it’s also important to plan for the future. Ideally, parents live to see their children complete the cycle of life by having children of their own. Responsible parents do need to plan for tragedy. An accident, a heart-attack, or some other event can take the life of one or both parents.
At Yaser Ali Law, our Tempe estate attorneys explain what documents new parents need to prepare and what issues they need to think about. Some of our recommendations, depending on the health of the child, and your unique family situations will include a review of the following:
- Will preparation. In the event of the death of both parents, someone must take care of your newborn. By designating the guardian in the will, parents decide who is best suited to raise the children. If you don’t appoint a guardian, then the relatives will have to decide who will raise the child. Even if there is not a dispute among relatives, the state of Arizona will have to approve the appointment. Parents should consult with the potential guardian to make sure they want to be the guardian.Parents can amend their wills as the child matures if they wish to change the guardian designation. Parents can also name backup guardians in case the primary guardian can’t raise the child or doesn’t want to raise the child. The will should also address how any property that passes through the Estate will be handled on the child’s behalf and who will be appointed to handle the assets for the child. Parents should also name the person who will be the executor, the person responsible for managing the estate.
- Trust creation. A trust is a way of setting aside funds that will be used for your child if you die or you are unable to provide for your child. The parent who creates the trust appoints the trustee, the person who manages the trust. The parent can also designate when payments from the trust are made, when the trust becomes active, and what payments are authorized. Trusts are often necessary if your child has any physical or emotional special needs.
- Insurance. It costs a lot of money to care for and educate a child. Parents should review whether their insurance needs are met.
- Designation of beneficiaries. Decisions need to be made as to who is the named beneficiary of any life insurance (the spouse, a relative, a bank, someone named in the will, or someone else) or assets that are payable on death (POD). Generally, the funds from any POD accounts go directly to the named beneficiary without going through the will. POD documents include more than life insurance. They can also include retirement accounts, IRAs, bank accounts, and other assets. Items that pass directly to a beneficiary can reduce any estate or inheritance tax obligations.
- Health care proxy creation. A health proxy, medical directive, or healthcare power of attorney is used so that someone you trust can make medical decisions for you– if you are physically or mentally unable to make these decisions on your own.
- A living will. This is a medical directive that appoints someone, other than the doctors who are treating you, to make end end-of-life treatment decisions for you.
- Preparing a durable power of attorney. This document appoints someone to handle your financial affairs in case you are not physically or mentally able to do so. For example, if you are unconscious, the holder of the power of attorney can deposit any work injury or disability checks into your checking account and pay your bills.
In many of these documents, your spouse will be appointed first. The harder decisions, which an experienced Tempe, Arizona lawyer will review, are who should be appointed if neither parent is alive or healthy.
Speak to an experienced Arizona probate lawyer today
At Yaser Ali Law, we represent adults of who ages who need to create or change their wills, trusts, and other estate planning documents. We understand the practical considerations and the legal considerations. For help providing for your newborn’s needs if you die or become incapacitated, please call us at (480)-442-4175 or complete our contact form to make an appointment.