As a new parent, you naturally want to ensure your new baby’s future in every way. For many new parents, infancy is a time for celebrating new life, and making a will is the last thing on your mind. For others, the process of bringing new life into the world sparks strong feelings of wanting control and needing organization. No matter where you fall on that spectrum, you might be struggling to figure out what steps you need to take to protect your children’s future should the unthinkable happen. Here are five key things every new parent should know about wills.
1. Choosing a guardian might be the most important part of your will.
If you pass away while your child is a minor, the first issue will be: who will assume responsibility for your child’s care. If you don’t name a guardian for your child in your will, or you simply don’t have a will, the courts may decide this question for you, and the guardian might not be the person you would choose. Selecting a guardian whom you can trust is in many ways more important at this stage than deciding about how to pass any assets you own.
2. Name an executor you trust.
To ensure your child does receive all that you have allocated when he or she comes of age, choose a trustworthy executor. Many people choose a family member, but it’s just as acceptable to appoint a corporate fiduciary (a bank or professional trust company) to handle your estate. Some people choose to have a trusted attorney handle their estate. Typically, an attorney or a corporate fiduciary has no emotional attachment to the family, which might seem bad, but usually results in less potential conflict.
3. Named beneficiaries on your financial accounts override the will.
Many accounts these days allow you to name a beneficiary. When you pass away, the funds in those accounts will go to the beneficiary named on the account, even if your will states otherwise. If you’re creating a will with your child in mind you should review your investment and bank accounts with your financial advisor to ensure there are no inconsistencies when naming beneficiaries. When planning your estate, it is also a good time to check retirement account and life insurance beneficiary designations with your financial advisor and your attorney.
4. A will is not always the appropriate document for your goals.
When naming your child as a beneficiary, a will only goes into effect after you die. If your will leaves property outright to your minor children, a court will step in and hold the assets until your child turns 18 when he or she will receive those assets outright. Most 18-year old children lack the maturity to handle even a small estate, so it is often unadvisable to make an outright distribution. Creating what is called a “testamentary trust” (a trust in your will) is one way to avoid having a court hold the assets for your minor children.
Creating a revocable trust is another way to avoid having a court step in. A revocable trust goes into effect when you create it and can provide structure to manage the assets you leave behind for the benefit of your child. You can often protect that child’s inheritance from divorce, bankruptcy or lawsuits if structured properly. An experienced estate planning attorney can advise you on the best option for your family and your circumstances.
5. In the absence of clearly stated intentions, the government steps in.
Think of your will, trust and other estate planning documents as an instruction manual for your loved ones, your personal representative, and the courts to follow. You must be clear in your stated intentions regarding your child and family. If you’re not clear or if you don’t leave any instructions at all, the government (probate courts) will step in and follow the government’s plan (Minnesota Statutes), which can lead to long delays and is probably not the plan you would have selected for your child and family.
Providing for your baby’s long-term welfare may start with just a simple will, but to be fully protected, you may need more. That’s why it’s important to talk with a competent estate planning attorney to make sure you have the right plans in place to fulfill your goals. We’re here to help! Contact us today to talk about your options to protect your new baby.