Preparing for, and welcoming, a newborn into your home is one of life’s biggest life events. And while it’s full of joy and excitement, it comes with certain adult responsibilities beyond feeding, diaper changing and endless laundry.
Here are a few of our most important tips to help new and expecting parents stay legally and financially sound.
Update Your Will
The addition of a new child should prompt your review or creation of an estate plan. Your will or revocable trust will now need to detail who you would like to be guardian of your minor child, in the case of your unexpected death. In addition, a minor can’t inherit property outright, so there would need to be a structure in place, such as a descendants’ trust or payments to minor provision, to facilitate that process. If there is no procedure like this in place, there would have to be a supervised guardianship appointed by the court, in the unfortunate case that something happens to you.
Apply for a Birth Certificate and Social Security Number
A birth certificate and social security number are crucial for identification and employment purposes. These forms are available at most hospitals. You can also find them through your local county public health department. Once your application is approved and you have received the documents, make sure the records are accurate and kept in a secure and easily accessible location.
Consider Purchasing Additional Life Insurance
Life insurance is an important safeguard for new parents. Your life insurance provides a pretty quick payout after a death, and can supply much-needed liquidity to provide for your family. There are a lot of different types of life insurance (whole life vs term), and it’s best to talk with a financial planner about what plan suits your family and financial situation.
Consider a 529 Plan
It’s never too early to start saving for college. 529 plans are a great way to grow an investment tax-free, which can be used to fund qualified education expenses in the future. The good news about these accounts are that the beneficiary designation can be switched without a taxable event. So if one child gets a scholarship or doesn’t pursue college, the account can be used to pay for a different family member’s qualified education expenses.