As a new mother myself, I understand the rush of emotion that comes with a new child in the house. You just want to relax and bond with your newest family member, but there are important matters to settle as you and your new bundle of joy get used to life together.
We've previously discussed the financial and legal matters that a new parent should set up before the birth, but there's also long-term planning for the "what if" and "just in case" scenarios. It's your job as a parent to always provide for your child, including when you can't be there to do it in person. By establishing guardianship and a revocable trust, you can help your children throughout life no matter what happens to you along the way.
Guardianship is an unpleasant but necessary topic for parents to think about. It means appointing somebody to care for your children if something happens to you. If you're incapacitated in an accident or if you suddenly pass away, you need to leave someone you trust in charge of your children.
It's important to think about specific details when choosing a guardian:
- Do they match your values?
- Are they financially capable?
- Are they physically capable?
- Does your child have a bond with them?
While the immediate response may be a grandparent or aunt/uncle, consider if your parents are physically able to keep up with a young child's needs, or if your siblings can handle an additional child. These are hard but essential questions.
What is a revocable trust?
A trust is an entity that established control over your assets. It's an estate planning tool where your assets will be distributed as you see fit. You appoint a trustee to oversee it--this can mean yourself while you're alive, and someone else upon your death. While trusts are better known for their role in probate administration, they are also a helpful parenting tool to make sure you care for your children as thoroughly as possible.
If you die when your child is a minor, the state distributes your inheritance at the age of 18. Through a trust, you can administer this over time, distributing assets in sums to cover necessary life expenses like college or buying a first home. A trust allows you to manage the money instead of turning it over to someone who may not be mature enough to spend it wisely.
A rewarding legacy
Along with the great joy it brings, parenthood also involves many difficult choices. When you consider the best interests of your child, these decisions are both worthwhile and necessary. By naming a guardian and by establishing a revocable trust, you can extend your influence to make sure that your child is raised in accordance with your wishes, no matter what happens between now and then.