Nothing surpasses the joy you feel when you bring your new child home for the first time. Whether (s)he came to you through birth or adoption, becoming a new parent changes everything. You may not realize, however, that your estate plan is one of the most important things that requires changing.
If you have never begun an estate plan, Kiplinger strongly recommends that you start one at the birth or adoption of your first child. Why? Because you have now become responsible, both financially and otherwise, for your child’s life, a responsibility you will bear for at least the next 18 years.
Estate plan considerations
While your estate plan should be unique to your needs and desires, you may wish to consider including the following in it:
- Your Last Will and Testament that among other things designate who you want to take physical custody of your minor child(ren) should you and your spouse die together in a common accident
- A trust designating your child(ren) as a beneficiary
- A special needs trust for any special needs child(ren) you have
- A school tuition plan for each child
Remember, your child(ren) cannot directly inherit from you if you die before (s)he or they reach the age of majority. Minors cannot own property in their own name. This is where a trust serves a vital function. The assets you place in it, either now or upon your death, belong to the trust, not your child(ren), even though the trust designates him, her or them as beneficiary. You will also need to designate a trustee of the trust. You yourself can be the primary trustee, but you should also designate a successor trustee who will assume your trustee duties if you die or become unable to continue fulfilling them due to an illness, injury, etc.