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Changing Your Estate Plan After Welcoming A New Child

For many people, one of the most joyful and exciting experiences in life is welcoming a new child to the family. The process might look different for some families, but whether you add to your family through childbirth or adoption, it will likely change your financial goals going forward. You may be relatively young and in good health, and think that creating your estate plan is a necessary task that you can put off for at least a few more years. However, you never know when tragedy will strike, and failure to prepare could result in additional stress for your loved ones dealing with your lack of estate plan. We recommend creating or updating your estate plan as soon as possible after welcoming a new child into your family. Want to learn more about your estate planning options so you can pass down your assets strategically and effectively? Schedule your free consultation with a skilled legal professional from the office of My AZ Lawyers today by calling 480-470-1504.

Happy family with baby, highlighting the importance of an Estate Plan

Can’t I Just Let My Assets Pass to My Child?

If you have what you think is a small and simple estate, you might not see the point in drafting a will and other legal documents to create your estate plan. However, you can use your estate plan to do more than just dictate who receives your possessions after you pass away. Your last will and testament can be used to state who you would like to be the legal guardian of your children if you pass away before they become adults. You can also select the executor of your estate in your will, who is responsible for filing documents in probate court and completing other tasks to ensure your estate is distributed properly. If you have a small estate and your executor files a small estate affidavit, your child will receive their inheritance much faster than if you let your estate pass through intestate succession.

Intestate succession is the term for when someone passes away without an estate plan in place, so their estate is distributed in accordance with state law. That means that if someone passes away without a will in Kentucky or California, it might turn out differently than someone who passes away without a will in Arizona. Depending on your personal circumstances, your estate might not automatically pass wholly to your child. If you are legally married at the time of your passing, a great deal of your estate will go to your spouse. You also may want to distribute your assets in some other formation than an even split among your children. An estate plan is the best way to ensure that your assets are distributed in line with your wishes after your passing. Creating your estate plan doesn’t have to be complicated when you hire an experienced attorney for the matter. Learn more about how our Arizona estate planning lawyers can simplify the process by scheduling your free consultation- call 480-470-1504 to get started.

Changing Your Life Insurance Beneficiary

Some, but not all, new parents who have life insurance policies wish to include their new child as a beneficiary after giving birth or adopting a child. Updating your will and estate plan doesn’t change your life insurance beneficiary, and vice versa. If someone disputes your will, failure to make these changes can be used as evidence in probate court, but isn’t binding and creates additional work for your loved ones. An estate planning attorney can help you decide what to do about your life insurance beneficiary taking into account your estate plan and how to make these wishes clear with the appropriate legal documentation. For your free consultation with a seasoned estate planning attorney in the Phoenix area, call 480-470-1504.

Trusts

Trusts have a wide variety of purposes and can be used by more than just the rich and famous. They can be an effective way for you to distribute your assets, especially if you have time to prepare to use trusts. Some of the most common trusts we see parents make for their children are educational trusts and special needs trusts. If you need assistance with either, as well as any other documentation to complete your estate plan, reach out to our Phoenix law firm for your free consultation at 480-470-1504.

Educational Trusts

Like the name suggests, an educational trust is used to help financially support a child’s education. Some parents want to make sure that their children don’t squander their inheritance, and an educational trust is a good way to accomplish that goal. The parent will need to choose whether the trust becomes operational before or after their passing, which can come with tax implications that significantly impact the trust’s value.

Like other types of trusts, there is an educational trustee appointed to make sure an educational trust is administered properly. You, the testator, would be the trustee if you create a living trust, but you should select a successor for when you pass away. If you create a testamentary trust, which goes into effect after your passing, you will need to name a trustee and an alternate or successor.

If you have multiple children, you will need to decide how to split an educational trust to be aligned with your wishes and what you think is fair. For example, if one child has dreams of attending medical school, you might want to apportion more of the trust to pay for their extended education, or just leave it even to treat your children equally. Creating an educational trust doesn’t necessarily guarantee that your child will attend college, vocational school, graduate school, etc. Therefore, you will need to dictate what is to happen to funds in the educational trust if your children don’t meet the requirements for its distribution. You could set it to be given to your children when they meet a certain age, get married, or have children, or name an alternate beneficiary for the trust.

Special Needs Trusts

If your child has special needs that will require long-term care, you can create a special needs trust to help provide for their care in the future. One of the key benefits of a special needs trust is that funds received from this type of trust won’t disqualify the recipient from receiving government benefits like Medicare and Medicaid. Another benefit of a special needs trust is the appointment of a trustee. The trustee can take care of important matters for the recipient, like paying for their medical services and making other purchases. Clearly, this is a highly important role, and only someone trustworthy and understanding of your child’s condition should be chosen for the part.

Update Your Estate Plan to Reflect Your Growing Family with Our Experienced Estate Planning Lawyers

Strategic estate planning allows you to reduce tax liability on your estate and the amount of time it takes for it to pass through probate. It can also make your assets more profitable if you use instruments like trusts. An Arizona estate planning attorney can help you navigate your options to achieve the best possible estate plan for your personal situation. Learn more about the benefits of creating your estate plan with our firm with your free consultation- call 480-470-1504 or contact us to get started today.