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3 Estate planning considerations for new parents

On Behalf of | Jul 1, 2022 | Estate Planning

Having a new baby is a time of great joy and excitement in Wisconsin. It’s also a time when many new parents start to think about their own mortality and what would happen to their child if they were to die. Even if you don’t yet have much wealth, you should take the following steps to ensure that your child is taken care of in the event of your death.

Create a clear, comprehensive will

This document will dictate how you want your assets to get divided among your beneficiaries. If you die without a will, state laws will determine how your assets get distributed, which may not be in line with your wishes. If you have minor children, it’s also important to designate a guardian in your will. This is the person who would take care of your children if you and your spouse were to die.

Create a trust

A trust is a legal entity that can hold assets on behalf of your beneficiaries. These estate planning documents come in handy in a variety of situations, including estate tax planning and asset protection.

If you create a trust, you will need to name a trustee. This is the person who will manage the trust on behalf of your beneficiaries. If you wish to be able to alter the trust during your lifetime, you can create a revocable trust. Otherwise, you can create an irrevocable trust, which cannot get changed once it’s created.

It’s also important to choose the right beneficiary for your trust. This is the person who will receive the assets held in the trust upon your death.

Purchase life insurance

If you have young children, it’s especially important to have life insurance. This will ensure that your family has the financial resources they need if you were to die. Life insurance can be used to cover a variety of expenses, including funeral costs, mortgage payments and living expenses.

While no one likes to think about their own death, it’s an important part of being a responsible parent. You wouldn’t want your child to be left without a guardian or financial support if something happened to you.