If you've recently become parents for the first time, either through birth or adoption, it's time to get your affairs in order. As a new parent, your mind might be on a lot of other things. Unfortunately, many new parents forget to update their estate plans. Now that you're a parent, you can't afford to do that. To make sure you have everything in order, here are four steps you need to do to get your estate plan updated.
Update Your Current Your Will
As a new parent, the first thing you need to do is update your current will. Because your current will doesn't include your child, you'll need to add them to your will. You'll also need to designate a guardian for your child. This guardian will step in to care for your child, should anything happen to you. Because of that responsibility, it's important that you take your time when choosing a guardian for your child. It's also important that you discuss your choice with the person you've selected. That way, they're given the opportunity to prepare for the responsibility.
Assess Your Insurance Needs
Now that you're a parent, take the time to assess your life insurance needs. If you don't have life insurance, now's the time to invest in a policy. If you have a small policy, now's the time to increase the coverage. You want your life insurance to be sufficient to protect your child's future, should something happen to you. A substantial life insurance policy will also help your guardian provide a stable life for your child. If possible, consider investing in two policies - one to cover basic living needs for your child, and one to cover a future college education.
Assign Your Beneficiaries
Now that you're re-examining your estate plan, use this time to assign your beneficiaries. You might think it's sufficient to simply name your beneficiaries. But, you also need to determine what assets your beneficiaries will receive once you pass. For instance, assets such as checking and savings accounts will all need you to assign a specific beneficiary to them.
Execute a Living Trust
Finally, now that you're a new parent, it's a good idea to execute a living trust. A living trust allows you to transfer your assets into the trust. Once in the trust, you'll continue to have use and ownership of the assets. But, once you pass, all of the plans you put in place for your living trust will automatically be implemented. This includes the transfer of ownership to your assets.
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