What New Parents Need to Know About Estate Planning

Becoming a parent is one of the most rewarding experiences in life, but it also comes with new responsibilities. As new parents, it’s essential to consider your family’s future, and that’s where estate planning comes in. Estate planning involves preparing for what happens to your assets and your children if you are no longer able to care for them.

Even at this stage in life, where you look forward to decades more with your family, it’s important to be prepared for every possibility. We can help you with an estate plan that fits your needs. Call John H. Ruby & Associates at 502-895-2626 to set up a consultation with our team now.

The Basics of Estate Planning

Estate planning is the process of deciding how your assets will be managed and distributed after your death. For new parents, this typically includes creating a will, setting up trusts, and naming beneficiaries. These steps ensure that your wishes are followed and your loved ones are protected.

A will lets you specify how your assets, like your home and savings, should be divided. It also allows you to name a guardian for your children. Trusts can manage your assets for your children, providing financial support for their needs. Naming beneficiaries ensures your accounts, such as life insurance and retirement funds, go directly to your chosen individuals.

The Importance of Creating a Will

A will is a fundamental part of estate planning and is especially crucial for new parents. This legal document lets you specify who should take care of your children if something happens to you. Without a will, a court will decide on a guardian, which might not align with your wishes.

In addition to naming a guardian, your will outlines how your assets should be divided. You can appoint an executor, a trusted person who will manage your estate, pay off any debts, and ensure your belongings are distributed according to your instructions. This helps prevent family disputes and ensures your desires are honored.

Setting Up a Trust for Your Child

Setting up a trust for your child is an important step in estate planning. A trust is a legal tool that lets you manage your assets for the benefit of your children. This can ensure that funds are available for important needs like education, healthcare, and daily living expenses. 

One major advantage of a trust is that it can help avoid the probate process, which can be both time-consuming and expensive. This means your assets can be transferred to your children more quickly. Additionally, a trust allows you to set specific terms on how and when the money should be used, giving you control over your child’s financial future even after you’re gone.

Naming Beneficiaries and Updating Accounts

Naming beneficiaries on your financial accounts is an essential part of estate planning. This includes accounts like life insurance policies, retirement funds, and bank accounts. By naming a beneficiary, you ensure that these assets go directly to the person you designate, bypassing the often lengthy and complicated probate process in Louisville.

As new parents, it’s crucial to review and update these designations to reflect your current wishes. For instance, if you name your child as a beneficiary, it’s wise to consider setting up a trust to manage those funds until your child reaches an appropriate age.

Considering a Power of Attorney and Healthcare Directives

A power of attorney is an essential part of estate planning that lets you to choose someone you trust to make critical decisions on your behalf if you’re unable to do so. This could include financial decisions or managing your day-to-day affairs. For new parents, this means that in an emergency, someone you trust will have the legal authority to act in your best interest.

Healthcare directives, often called living wills, let you outline your wishes for medical treatment if you can’t communicate them yourself. This can cover everything from life support preferences to specific medical procedures you do or do not want. Having these directives in place ensures that your healthcare preferences are known and respected, which can relieve stress for your family during difficult times.

Plan for the Future with John H. Ruby & Associates

The team at John H. Ruby & Associates is committed to helping you draft an estate plan that plans for every possibility in your future. Let’s sit down and talk about your options. Call us at 502-895-2626 or send us a message online.