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New baby? Time to tweak your estate plan

With all the celebrations surrounding the birth of a baby, it's easy to forget that the parents need to update their estate plan to reflect this happy event. For some couples, this could mean drafting the documents that form the basis of a rudimentary estate plan when none is already in place.

Many 20- and even 30-somethings haven't given much thought to their estate plans, but once the babies start arriving, it's time to get realistic about the future. For those starting out from scratch, let's review what every parent needs as part of a comprehensive estate plan, and why.

Life insurance

Parents of young children need to take out life insurance policies on themselves and their spouses that will provide for their children in the event of their untimely deaths. Most young couples choose term life insurance in the 20- to 30-year range because this covers the years where their families would be most vulnerable if they suddenly died. However, your estate planning attorney can review your family's particular needs and make a recommendation based on those.

Guardianship documents

If both you and your spouse were to be killed in an accident, who would step in to care for your minor children? It's likely that both of you have very strong feelings about this matter. It should certainly be discussed thoroughly between the two of you until a consensus is reached. Then, the person or couple chosen should be asked to make sure they are amenable as well.

Often, couples will choose custodial guardians for their children who are related to the families and then select different, perhaps unrelated, fiduciary guardians for the assets the children will inherit and for their upkeep.

The reason for this is two-fold. Your sister-in-law might be an excellent mother who would shower your kids with love and affection, but has never been able to balance a checkbook with any accuracy. She is certainly not the one you would want at the helm of the kids' financial security.

The other reason is simply to avoid any conflict of interest or the appearance of impropriety. Choosing separate custodial and fiduciary guardians eliminates this problem.

Last will and testament

While all adults should have a will, once they have children, it becomes especially important. Aside from the practical nature of making probate much easier for your heirs, if you always intended that your oldest son inherited grandpa's shotgun or your daughter wound up with Aunt Elizabeth's pearl jewelry, declaring this in your will clarifies the matter to all.

Living will

If you received catastrophic injuries in an accident, would you want to be kept alive in a vegetative state, fed through a tube and breathing through a vent, maybe for a decade or more? Most people wouldn't want this if doing so would eat up their families' savings and run them into debt. But without a living will in place to state your wishes regarding the matter, that could very well occur.

Health care proxy

A designated health care proxy is the one who steps in and makes your health care decisions once you are no longer capable of doing so yourself. Some couples choose each other for this all-important role, and that may be your choice. But keep in mind that your spouse's grief may be too incapacitating for him or her to think clearly at the time when a clear head is needed most.

Also, a single incident or accident could render both spouses too physically or mentally disabled to make decisions. It's a good idea to designate someone to step in to the role of health care proxy under those circumstances.

Making hard decisions in a time of joy

At a time of great joy in your lives, it can be difficult to imagine these tragedies can befall your family. A Florida estate planning attorney can help you plan for any circumstances that could affect you and your loved ones and make sure that all your bases are covered.

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