If you include estate planning as part of the baby preparation process, you are one step ahead of others. More than half of individuals with children die without a will or estate plan. When this occurs, their assets become subject to the laws of intestate, which means the state governs how and to whom to distribute property.
An estate plan — whether it comes in the form of a simple will or a more complex trust — negates the need for the state’s involvement and can give you much-needed peace of mind. However, for your plan to provide the most protection for your children, the financial experts at The Motley Fool explain that there are special considerations to make.
Name a guardian
Possibly the most important aspect of your estate plan is the appointment of a guardian for your minor children. The loco parentis — which is the legal term for “in the place of the parent” — takes legal responsibility for raising your child if something should happen to you and the other parent. If you do not name a guardian, the courts will appoint one for you, and it may be a person you would not have chosen.
Review your accounts for named beneficiaries
The named beneficiaries on your accounts (think retirement accounts and life insurance policies) may override those in your will. As you have children, review your accounts to ensure the designations are consistent with what you have in your will.
Select an executor you trust
The executor is responsible for allocating your property and upholding your final wishes, so it is important that the selected individual respects you as much as you respect him or her. Many people choose family members to execute their estates, but do not discount the benefits of using an objective third party.
Be clear and consistent
An estate planning document serves as an instruction manual for the courts and executor to follow. If your will or trust contains inconsistencies, unclear intentions or missing instructions, the probate courts may step in and invoke state laws. State laws may go directly against your wishes and lead to lengthy delays in the process. Use clear, concise language that leaves no room for interpretation.
After you have taken these steps, continue to review your plan after major life changes to keep your children’s current needs covered.