Estate Planning Tips for New Parents: Protecting Your Family's Future

Aug 22

Becoming a parent is one of the most profound and life-changing experiences. The moment you hold your newborn in your arms, your entire world shifts. Your priorities change, and your focus turns on providing your child the best life possible. Amidst the excitement, sleepless nights, and endless joy, there's an essential task that often gets overlooked—estate planning.

In Texas, if something unexpected happens to you, having a solid estate plan ensures that your wishes for your child's care and financial security are honored. Without it, these decisions could be left to the courts, potentially leading to outcomes that don't align with your values.

Why Estate Planning Matters for New Parents

Estate planning might not be the first thing that comes to mind when you think of parenthood, but it's one of the most crucial steps you can take to protect your child's future. Adding a new addition to your family? Or maybe you know someone who is! Now is the perfect time to get your affairs in order. Here are some tips for new parents:

1. Designate a Guardian

One of the most important decisions you can make as a new parent is choosing a guardian who will care for your minor children if something happens to you and your spouse. In Texas, if you don't designate a guardian in your will, the courts will decide who gets custody of your child. What if they appoint someone who does not share your values or parenting style? This could lead to family disputes or a court-appointed guardian who may not be your preferred choice. By clearly naming a guardian in your estate plan, you can have peace of mind knowing your child will be cared for by someone you trust.

2. Setting Up a Trust

Few parents want their children to get a big lump sum on their 18th birthday, with no rules or restrictions! If you're a new parent, the thought of leaving a significant sum of money directly to a minor might concern you. Establishing a trust allows you to set specific terms for how and when your child will receive their inheritance. We call this putting in “guardrails”.

You can appoint a trustee to manage the funds until your child reaches an age where they can responsibly handle their finances, which in Texas, can be when they turn 18, 21, or even older. A trust can also protect your child's inheritance from potential creditors, divorce, or mismanagement. By carefully crafting the terms of the trust, you can ensure that the money you leave behind will be used for your child's benefit, such as their education, health care, or living expenses.

3. Draft a Will That Reflects Your New Priorities

A will is a foundational element of any estate plan, and as a new parent, it's essential to draft one that reflects your current priorities. Your will should include provisions for the distribution of your assets, the appointment of a guardian for your minor children, and any specific instructions you have for your child's upbringing.

4. Avoiding Unnecessary Costs

As a parent, you want every penny of your hard-earned money going to your children, not to lawyers or the government. Probate court can be an expensive process, eating up as much as 7% of the total estate. A better option may be a revocable living trust, which bypasses probate court, saving your family money and time.

5. Consider Life Insurance and Disability Insurance

As a new parent, securing life and disability insurance is a practical way to protect your family's financial future. Life insurance provides a safety net for your child in the event of your untimely death, covering expenses like living costs, education, and other necessities. Disability insurance, on the other hand, replaces a portion of your income if you become unable to work due to illness or injury.

In Texas, the cost of raising a child can be significant, and these insurance policies can provide the financial stability needed to maintain your child's standard of living.

6. Work with an Experienced Estate Planning Attorney

Working with an experienced estate planning attorney, like Reyna Law, can help ensure that your will complies with Texas law and accurately reflects your wishes. A well-drafted will can prevent legal battles and ensure that your child's future is secure. Estate planning is a critical step in ensuring that your child is cared for, no matter what life throws your way. Don’t wait until it’s too late—start planning today.

Ready to protect your family’s future?

As a new parent, you want to do everything in your power to protect and provide for your child. By working with us, you can create a comprehensive plan tailored to your family's unique needs.

Take the first step towards peace of mind by booking a Peace of Mind Planning Session with attorney Josh Reyna. This is a 1-hour meeting where we will review your questionnaire, answer your questions, and present our flat fee packages! If we decide we’re a good fit to work together, we’ll take the next steps. And if not, that’s fine too! Book your Peace of Mind Planning Session HERE. Mention this blog and we’ll waive the $450 session fee!

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