An estate plan not only lets you decide who gets what, it gives you a way to choose a guardian for your minor children. Other estate planning goals include minimizing taxes and avoiding a lengthy probate process.
As a new parent, just how much estate planning do you need? Here are the key tasks you need to accomplish soon after your child is born.
Write a Will
If you want your property to go to the people you designate, a will is a must. Without one, your state will select your heirs are and allocate your assets according to its rules, regardless of your wishes. The process can be stressful and expensive for your loved ones. A will is also the only way to designate a custodian and/or guardian for your children.
Create a Durable Power of Attorney for Health Care
This document lets you name someone to make health care decisions for you if you’re unable to, such as whether to use life-sustaining measures to prolong your life. Many people use a simple form called “Five Wishes,” which you fill out and give to your doctors.
Create a Durable Power of Attorney
If you’re physically or mentally unable to take care of your finances, you’ll need someone to handle them for you. A Durable Power of Attorney assigns this responsibility.
Consider Setting Up a Trust
Trusts allow you to stipulate how your children can spend their inheritance and when they’ll receive the money or property you’ve left to them.
Consider Giving Gifts While You're Alive
In 2007, you can give up to $12,000 a year to as many people as you choose without you or them incurring taxes. Couples can give up to $24,000 ($12,000 each). 3
Other Tasks
Set up a filing system that includes information on all of your assets and investments, insurance information, will, and other financial documents. Then make sure the person you named in your Durable Power of Attorney knows where to find documents.
3Internal Revenue Service