A common misconception about estate planning is that only older people do it. However, young adults can benefit from creating an estate plan too. Over time, you can update your estate plan as you go through significant milestones, such as having your first baby.
Why is an update important?
An estate plan is not something you create and then forget. As the years pass, you will likely gain or lose properties, marry or divorce your partner, or move to a different state. The government might also introduce new estate and tax laws. Ensuring that your estate plan reflects these changes can help prevent conflict, extra costs and issues with the future distribution of your assets to your beneficiaries.
How should you update your estate plan?
You might want to make the following changes to your estate plan upon your children’s birth.
- Name your children as heirs. It is best to update your will upon your children’s birth and identify them as beneficiaries of your assets. Failure to do so might result in inheritance issues later. Naming your children as beneficiaries generally allows you to leave specific wishes, such as which and how much of your assets they will inherit.
- Create a living trust. A living trust assigns a trustee to manage your assets for your beneficiaries, which could be your children. It also allows you to leave explicit directions for how the trustee will distribute these assets to your beneficiaries upon death. A living trust usually bypasses the probate process, so many prefer it over creating a will.
- Identify a legal guardian. A legal guardian takes over caring for your children after your death. If you do not appoint one yourself, the court might name someone unsuitable for or unwilling to accept the role. A guardian can be anyone you choose, even if they are not a relative.
Your estate plan can help protect your children even after your demise. An estate planning attorney can help you make the necessary changes so that your estate plan matches your situation and intended outcomes.