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Modern Estate Planning for New Parents

Posted on: January 16th, 2015
estate plan new parentsTrends in American family structures are changing, and estate plans must evolve to keep up with these changes. Estate planning for parents-to-be may not take the same approach as it did five, ten, twenty years ago. The number of cohabiting unmarried couples has gone up, and the number of second marriages involving children from a first marriage has also risen. 

Unmarried parents have certain estate planning challenges that married couples may not need to be as concerned about. Without a valid Will, an individual’s assets are distributed according to his or her state’s intestate laws. An unmarried parent may want their partner to receive assets to care for their joint child, but state laws do not inherently provide this to unmarried couples. A comprehensive estate plan for unmarried parents can ensure assets are titled properly, beneficiaries are designated on financial and retirement accounts, and perhaps a trust is established for the benefit of the child and co-parent. Assets held in trust transfer confidentially outside of probate and ensure designated individuals are provided for.

According to the United States Census Bureau, half of all re-marriages involve at least one child. How are children from previous marriages addressed in the estate plans of new step-parents? Although a step-parent may update their Will to reflect non-biological children, if the step-parent neglects to update beneficiary designations on financial accounts those assets will pass to former designees. If none are named, then intestacy law generally transfers finances to the decedent’s spouse.

The estate planning concerns of single parent households vary. Did a new mother or father’s spouse or co-parent pass away? Or has a single person completed an adoption process on their own? In the event of a single parent’s incapacitation or death – who will care for the child? State guardianship laws may not match a parent’s wishes. Estate plans include naming guardians and structuring assets for the care and well-being of the child or children.

A growing trend for parents-to-be, married and unmarried alike, is early college savings. Many families are starting accounts before a baby is born. Contributions to 529 College Savings Plans broke records in 2014, accumulating more than $220 billion in accounts.

New parents’ concerns can be addressed during an estate plan review. Guardianship, college savings, biological children, step-children, future children – all of these areas are important topics for parents to discuss together and with their estate planning attorney.
 
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