New parents and parents-to-be in California should consider creating or updating their estate plan with their children in mind. It is important to remember throughout this process than minors cannot inherit assets.
Taking care of children
First, you need to make sure there is someone to raise your children if anything happens to you and the other parent and that there is someone to manage your assets on the child’s behalf. You can name a guardian for your child in your will. In addition, consider getting life insurance. To decide on the amount of coverage you need, think about how much money will be necessary to provide for your child, including such costs as college.
Taking care of yourself
Everyone should have documents in place to appoint people to make health care and financial decisions for them if they are incapacitated. The former is usually called a health care proxy or health care power of attorney. The latter can be done with a financial power of attorney. As a parent, these become even more important because you want someone to be able to access money to care for your child if you cannot.
In addition to your life insurance policy, you may have other assets, such as a retirement account, that involve completing a beneficiary designation. Be sure that you name a spouse or another loved one and not a minor child, who cannot inherit these assets. In some cases, you may want to consider a trust, which gives you more control over how and when your assets are distributed.
Once parents have completed the estate plan, they may want to review it every few years to ensure it remains up to date. Family changes as well as changes in assets and tax law can mean a revision is necessary.