Estate planning changes when a new baby comes along

On Behalf of | Aug 28, 2023 | Trusts

Most people in Indiana get married with a solid plan for their future, including when to buy a home, how to improve their finances, and when and how many kids to have. However, it is not uncommon to find that 15 years down the line, you have an unexpected, wonderful new baby. Certainly, your new child will throw a wrench into the best-laid estate plans, and it is important to make financial and legal changes accordingly.

Rewrite your will

When you receive the news that you are expecting, it’s essential to rewrite your will as soon as possible. You will need to name a guardian, who is the person who will take over parenting if something should happen to you, and redistribute assets.

Remember, creating a new will will require you to revoke the old one. You can do this by including a written statement in your new will that all prior wills are void or tearing up your old will and telling witnesses.

Get life insurance

Life insurance is an essential estate planning tool that would replace your earnings for a few years should something unfortunate happen to you. Most people in Indiana prefer term life insurance because it’s affordable, flexible and has low premiums. You may also want to consider whole life insurance because its cash value builds over time.

When purchasing life insurance, it’s crucial to consider the financial stability and reputation of the insurance company. Also, carefully evaluate your family’s financial needs to determine the right amount of coverage. Consider factors such as outstanding debts, daily living expenses and your child’s future education costs.

Update beneficiaries

You will also need to update the beneficiaries on any retirement accounts, insurance policies, investments and bank accounts. All it takes is filling out the beneficiary form on the account documents. Doing this will help your family avoid probate, which is an expensive and time-consuming process.

Welcoming an unexpected child into your world is an event filled with surprises and joy. This happy disruption to your life also serves as an opportunity to review and reshape your estate plan, ensuring that it continues to serve your growing family’s needs. So keep adapting and planning and savor the precious moments with your unexpected bundle of joy.