Even if you’re still waiting for baby to officially arrive on the scene, it’s hard to imagine that little person ever being without you. But as a parent, your job is to plan for her future—and that requires more than just saving up for her college education. Should anything happen to you, you’ll want to know she’ll be taken care of. The best way to do that is by drafting a will and a comprehensive estate plan. Yes, it’s a big to-do, but it’s one that should be crossed off your list as soon as you can. As daunting as it may seem, getting started is simpler than you’d think. We asked Sarah Summerall, a California-based estate planning attorney who’s part of the ARAG® attorney network, about seven things parents need to know.
1. You don’t have to wait until baby is born.
It may feel like you already have a million things on your plate, but there’s an upside to devising a will while pregnant. Simply put, once baby arrives, it may be more difficult to find the time. “I have parents come back two or three years later saying, ‘Okay, we finally made time for this,’” Summerall says. “It stresses people out when it’s not done, so it’s nice to get it checked off early.”
2. Preparation is great, but don’t overthink it.
When you make your first appointment with an attorney, don’t worry about having all your i’s dotted and t’s crossed ahead of time. “I think clients get confused thinking they have to have a list of all their assets [ready to go]. That was much more true of estate planning 10 or 15 years ago,” Summerall says. In this digital age, that information is easier to find once it’s needed. The biggest question you should be prepared to answer is: Who do you want in charge? Once that’s settled, your lawyer can guide you through making those other big decisions and help you understand any financial details you’ll need to provide later on.
3. Learn the difference between a will and a trust.
A will is just one component of estate planning. In it, you can designate who inherits your belongings and takes care of your minor children, and you can express your wishes for your funeral and burial. A trust, on the other hand, involves transferring the management of your assets to another person (the trustee) for the benefit of a third person (usually your children). Many times, estate planning includes both: a will to name your child’s guardian, and a trust to determine how and when your child will inherit your wealth. The biggest difference between the two is the probate process, in which the court oversees the administration of the will, making sure the will is valid and followed properly. The executor of your will is required to have all actions (like distributions) approved by a court, which can be time-consuming. A trustee of a living trust, in contrast, gets to skip the courts and instead report directly to the beneficiaries. (Keep in mind there are different types of trusts you can set up.) “Trusts are more work in the beginning,” Summerall says. “It takes more money and effort in the planning stage, but less money and effort in its administration later on.”
4. Special circumstances require special trusts.
There are a few sticky situations where it’s especially important for your will to be as specific as possible. Because stepchildren are not legally related to their stepparent (unless they’ve been adopted by them), they’re not automatically beneficiaries, as your natural children would be. A stepkid is “treated just the same as a neighbor or a friend, without a lot of rights,” Summerall says. “I’ve seen a number of cases where I felt like the person writing the will didn’t intend to leave their stepkids or foster children out.” If you want to pass on something to your stepchildren, create a joint trust with your spouse that names them as beneficiaries. It’s also important to pay particular attention when you have a child with special needs. The default, by law, is that your property goes directly to your child. But if he’s on public benefits and then inherits money, he could lose the extra support. In these instances, Summerall recommends establishing a special needs trust to provide for your child without compromising governmental assistance.
5. Clearly spell out who should (and shouldn’t) take the kids.
This may seem like a no-brainer, but you shouldn’t just choose one person to be your child’s guardian. Summerall recommends listing two or three (in order of preference), in addition to providing names of people who should be excluded, whether you just don’t like their parenting style or there’s a more serious issue going on. “In some families, there is history of domestic violence or gambling problems, or there may be someone with mental health issues who might petition for guardianship. You want to make sure that the judge knows they’re not an appropriate person to serve as a guardian,” Summerall says.
6. You don’t need to name a separate executor and guardian (unless you want to).
Whether or not you pick one person for both roles depends on your family’s needs. The ideal situation, according to Summerall, is for the same person to be in charge of your children and finances (so they would serve as both the “guardian of the person” and the “guardian of the estate”). “It’s the easiest way for the guardian to be a good parent, because they can make smart choices about spending the money,” she says. If you do not have an appropriate person in your family to manage finances, Summerall recommends you consider a professional fiduciary—a person or legal representative who’s bound to act in the best interest of the child. Using a professional fiduciary puts the burden of financial decisions outside of the family, avoiding possible disputes when one family member is in charge of the finances and a different party is in charge of the day-to-day care.
7. Legal insurance can make things easier.
There are multiple times in life where legal advice and assistance is crucial, and estate planning is definitely one of them. A legal insurance plan gives you access to a network of attorneys to help you navigate the process. Plus, in addition to the monthly fees and a deductible (if applicable), you only have to worry about paying notary and property recording fees, says Summerall. With a company like ARAG, drafting an estate plan might cost a few hundred dollars (rather than a few thousand) if you’re paying out of pocket.
The Bump and ARAG present Adulting 101, a sponsored series that delivers real-world advice for all of your memorable milestones—and occasional challenges—of parenting. Visit ARAGlegal.com/thebump to download a free organizer with checklists and work sheets to help you stay on top of things as a new parent.