You’re a new parent thinking about drafting your first will to get estate planning off to a good start. First, be prepared for a lot of love from your estate planner. They’ll be delighted that somebody is finally following their most important advice: Don’t wait to get your house in order.
When you’re looking forward to the future like you are now, you probably prefer happier thoughts. But the time is right to install legal and financial safeguards for your child. You need all the sleep you can get right now, so you don’t need to worry over your estate.
Choose a healthcare proxy and power of attorney
If you died or became incapacitated, there would be at least four roles needing to be filled. Maybe the same person could play them all, but there are pitfalls to that. Plus, you’ll need to name backups for worst-case scenarios.
Name a health care proxy and someone to have power of attorney if you’re no longer able to make your own decisions. Health care proxies make medical, including end-of-life, decisions based on factors such as what you “would have wanted” or specified in your estate plan.
They’d have access to your medical records and would need to have a deep understanding of your values. Now that you’re a parent, they may face even more challenging personal decisions that your child might think about for quite some time.
Power of attorney lets someone change beneficiaries, sell your real estate, collect government benefits, buy insurance on your behalf, operate your business, manage your retirement accounts and much more.
Both need to be people you trust. But you may not want their responsibilities to clash or compete within the same person. How much should the person making end-of-life decisions be focused on the bills?
Choose a guardian and a trustee
The guardian’s job is to essentially raise your child as a substitute parent. They’d try to get them to eat, brush their teeth and go to bed. Decisions like the housing they’d live in, where they’d go to school, and which relatives could visit would all be up to them.
A court will decide your child’s guardian, but your choice, especially if properly committed to paper, could carry considerable weight.
In contrast, the trustee would hold the purse strings. They’d pay the bills and oversee larger expenses, file tax returns, and could make investments in your child’s name.
The trustee and the guardian could be the same person, but good guardians and good accountants aren’t always the same person. Consider naming a co-trustee to look over the guardian’s shoulder. A court could choose the trustee, but your decision would likely stick if you made one.