Having children can both bring you joy and lead to more responsibility. One of the biggest responsibilities is planning for the future, which includes estate planning.
It is important to consider how having children affects this process.
Naming guardians
When you have children, one of the most important aspects of estate planning is naming guardians. A guardian is someone who will take care of your children if you die.
Without a guardian named in your will, the court decides who will take care of your children. Naming a guardian ensures that a person you trust will protect and love your children in this worst-case scenario.
Setting up a trust
Establishing trusts is another huge component of estate planning. Trusts allow you to set aside assets for your children, managed by a trustee until they reach a specified age or milestone.
Trusts protect assets from being misused and often provide funds for education, living expenses or other important needs. This method of managing inheritance helps ensure that your children benefit from the assets in a responsible and planned manner.
Choosing beneficiaries
Beneficiaries are the people who will inherit your assets. When children are a part of your family, you need to carefully choose beneficiaries.
You may want to list your children as beneficiaries of life insurance policies and retirement accounts. It is important to update these designations regularly, especially after the birth of a child. This ensures that the assets go directly to your children without going through probate.
Planning for special needs
If your child has special needs, estate planning requires extra steps. You might need to set up a special needs trust. This type of trust ensures that your child receives proper care without losing government benefits.
Providing instructions for care
Estate planning can include specific instructions for the care of your children. You might leave a letter of intent. This document includes details about your children’s daily routines, medical care, education and values. This helps the guardians understand your wishes and provide consistent care.
Estate planning ensures that children stay safe and that people distribute assets according to your wishes. By taking these steps, you can secure your children’s future and have peace of mind.
