It is an exciting time preparing for a baby. Whether you are a first-time parent or you already have a couple of kids, a new baby represents endless possibilities and potential. However, it is also a lot of responsibility. If you are preparing for a new baby, don’t forget to update your will and estate plan so you can protect your little one even before they arrive.
A will helps distribute your estate fairly. If you have never drawn up a will before, you don’t have to wait for your baby to be born to do it. In the will, you can include children born to you after you sign.
Why Set Up a Will When Expecting a Baby
With a will and estate plan, you can ensure your little ones have a guardian and are financially cared for in the event of your incapacity or untimely death. If you don’t have a will, the government will decide on the most critical questions about your children’s well-being. This can be a difficult and negative experience for your kids.
For example, the process to establish a guardian can be lengthy as courts screen potential candidates for their suitability. So your children could be placed in foster care in the in-term. To avoid this, a guardianship clause should be added to the will.
Likewise, if you have a spouse, your estate may be distributed between them and your children. If you have other plans for your wealth, such as giving it solely to your biological heirs, you must designate it within your will and estate plan.
If your kids are minors, or if you do not want them to receive your whole estate right after they attain the age of majority (legal age), consider settling a testamentary trust in your will. In such a case, a trustee would be appointed to manage your estate until the kids reach a certain age. By default, trustees must preserve the inheritance and avoid overspending. As a result, your kids and guardians may have a limited budget for their daily needs so consider adding a clause authorizing additional spending by your trustee so your children maintain the lifestyle they currently enjoy.
These are just some of the scenarios to consider. Every situation is different and requires a conversation with your estate planning lawyer. Your lawyer will generally ask you a couple of questions so they get a sense of how to protect your wishes. Being mindful about your options helps you prepare for an estate planning discussion.
Things to Consider When Preparing a Will With a Baby on the Way
As a parent, you will need to consider the following before you draw up a will.
Who will be your child’s guardian?
If you have a partner, the other surviving parent would be the guardian for your child. If your children survive both parents, the court will most likely respect your wishes to appoint the guardian named in your will. However, the guardian you have appointed is not obligated to take on the responsibility. In which case the court would need to find a substitute.
Therefore, discuss guardianship with whomever you would like to appoint before crafting your will to ensure they are open to taking on the responsibility. Also consider naming a second-choice guardian to replace the first, if for whatever reason your first-choice guardian is unavailable to act.
Who will handle your children’s finances?
While some people may be excellent guardians, they may not be financially savvy. Appoint a trusted executor who will administer and interpret your will and estate plan with your children’s inheritance and best interests at heart.
An executor is responsible for carrying out your wishes according to the will, such as distributing assets. They should be someone who has the knowledge, time, and ability to handle your estate’s finances.
If you have minor children, assets left to them are typically held in a trust until they reach the age of majority (the legal age of 18). Since guardians may not access funds for anything beyond necessities, they may have limited budgets for the daily needs of your children. Therefore, setting up rules of additional maintenance and support within the guardianship clause is critical for your children to enjoy the same lifestyle they are used to.
At what age will they receive inheritance?
When you leave your estate to your children, they are often entitled to receive it as soon as they reach the age of majority. However, many parents will postpone inheritance or stagger payments because they believe a large sum of money at an early age can be too large a responsibility to bear.
Speak to your estate planning lawyer about the possibilities. Some parents see that their children receive the first payment at eighteen to cover their college or university education and then schedule the remainder at a mature age or when they are ready to buy a house.
Should I leave my assets to my spouse?
If you feel comfortable leaving everything to the spouse, make your children contingent beneficiaries after your spouse. In this case, your spouse would receive your estate if they survive you. If they predecease you, the children will receive the inheritance as your second choice, and your estate will not end up in the wrong hands.
Each jurisdiction has different rules when it comes to will writing and estate planning. The only way to ensure you are creating a will that will not be misinterpreted in your area is to speak with an estate planning lawyer near you. Wills are an essential document that you don’t want to leave too late. Ensure you are protecting your children and giving them the future you want.
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