Episode 20: Estate Planning and a New Baby: What You Need to Know

Estate Planning Lawyer, Peter Klenk

Estate Planning and a New Baby: What You Need to Know

Hello. It’s Peter Klenk from Klenk Law, here to talk with you again a little about death and taxes. Today’s subject is planning for the new baby. Estate planning is essential for anyone with a child under the age of eighteen, but a new baby often inspires this planning. Right?

You have a new child coming—maybe it’s your first one—and all of a sudden, you realize there’s a lot of responsibility. Kids make you take things much more seriously than you have before. One of the things you need to do is plan for your child in case something happens to you.

So what does that entail? Let’s go through the basics. It might sound scarier than it actually is. Once you understand the steps you need to take, it’s not that bad, and it’ll all make sense.

First, if you have a baby, what happens if you get sick or can’t take care of your child? What if you simply aren’t available to care for them? In most states, including Pennsylvania and New Jersey, you can create a document called a Temporary Guardianship. This document allows you to nominate someone to step in and care for your child if you and the other parent are unable to do so. It’s typically effective for sixty days, allowing the guardian to make important decisions for your child and, if needed, pick them up from daycare or the hospital.

Having this document available provides reassurance to medical staff, law enforcement, and others, who might be hesitant to release your child without proper authorization. If you have a relative or trusted person caring for your child, they should have access to this document in case of an emergency.

This document is especially useful when you’re on vacation. Imagine you’re in Disneyland and end up in an accident. The designated guardian can simply text the document to the nurse’s station, authorizing care for your child. It’s a versatile document, useful for emergencies until your child turns eighteen.

The second document you need is a will, specifically one that plans for your child’s care if something happens to you. If your child is named as a beneficiary of your assets but is under eighteen, they won’t be able to manage those assets. And if you pass away and there’s no designated guardian, the court may end up assigning one. Even if the other parent is not someone you’d want managing these assets, they might end up in charge by default.

To avoid this, you can establish a trust in your will. This trust can grant a trusted person—perhaps a sibling or friend—the power to manage assets on behalf of your child until they reach an age where they’re more capable, usually around twenty-five. This arrangement ensures your child’s needs are met without the need for court involvement or outside intervention.

You should also be mindful of naming beneficiaries for assets like life insurance or retirement accounts. If your child is named as a beneficiary and they’re under eighteen, the same issues arise. It’s often better to designate your trust as the beneficiary to avoid unnecessary court involvement and to allow for smoother management of funds for your child’s benefit.

Another important document is a summary of your assets. For our clients, we provide a summary that includes a list of banks and institutions associated with their accounts. This may seem simple, but it’s easy to overlook. Many people don’t think to compile this information, and in a digital age, access to accounts might be limited if no one has your email password. A simple list of where your assets are kept can save time and money, ensuring everything is accessible and not lost.

The goal is to ensure that the most money possible is available to care for your child, supporting them through their education, and possibly even beyond.

So, these are the basic considerations for any parent with a child. Temporary guardianship, a will with a trust, and ensuring assets are organized and accessible for those who will care for your child. Of course, we’re happy to discuss your specific situation and create a plan that fits your needs.

Give us a call. I know these aren’t topics anyone enjoys thinking about, but we all know they’re important. We’ll do our best to make the process as easy as possible so that you and your child are safe. Take care, like, and subscribe for future podcasts. We’ll talk to you again soon.

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