Newborns and even preschool-aged children are almost entirely dependent on their adult caregivers. Parents usually want to give children everything that they can, from love and attention to fun toys and meaningful lifelong memories during their childhood. New and expectant parents often dream of certain milestones, like watching their children graduate from high school or attending their weddings. A very small number of parents will not achieve those goals because they will die while their children are still young.
Those who are expecting a child or have recently added one to their household need to put together an estate plan as a way to better protect their child from tragic losses that might limit their future opportunities. These are some of the ways in which a parent’s estate plan can potentially help a child in the event that the worst happens.
Providing financial stability
New parents frequently invest in life insurance if they have not already purchased a policy. That way, if anything happens to them, there will be financial resources for their surviving family members. Parents may also need to change the beneficiaries of existing life insurance policies by filing new paperwork with the insurance company.
Naming a guardian
Typically, if a parent dies, the surviving parent will take over all parental responsibilities. However, there are situations in which both parents die at once or where the surviving parent is incapable of meeting the needs of the children. Parents can nominate a guardian to care for their children in their wills. Typically, it is important to discuss the possibility of future guardianship with individuals before naming them in estate paperwork.
Setting aside resources for future support
Life insurance proceeds may help cover cost-of-living expenses while the children are still young, but most children benefit from parental support well into adulthood. Some parents may begin funding a trust or arrange to have some of their property transferred to a trust when they die so that they can carefully structure the distribution of those assets to their children. It is possible to put rules in place to hold property until they become legal adults to help them buy a home, start a business or pay for college.
Putting together a thorough estate plan or adding to existing documents is an important step for someone who has children in their family that will need support if anything happens to them.