Welcoming a new child is one of life’s greatest joys and responsibilities. Between setting up the nursery and planning for sleepless nights, estate planning might not be top of mind. Yet for new parents in Ohio, creating or updating an estate plan is one of the most important steps you can take to protect your growing family.
A well-crafted estate plan ensures that your wishes are honored, your child is cared for, and your assets are managed responsibly, no matter what the future holds. Here’s what new and expecting parents should consider when planning for the future.
Start with the Basics: A Will and Guardianship Designations
For new parents, a Last Will and Testament (“Will”) is essential. It allows you to:
- Name a guardian for your minor child if both parents pass away.
- Designate an executor to manage your estate and carry out your wishes.
- Distribute assets according to your preferences rather than being divided by state law.
In Ohio, if you die without a will, the probate court will have to determine who raises your child and how your assets are distributed. While the court will do its best to determine who may potentially care for your child, it is best to make the decision yourself. Therefore, taking the time to create a Will gives you control and peace of mind regarding your child and assets.
Consider a Revocable Living Trust
A Revocable Living Trust is a powerful estate planning tool for young families. It allows you to:
- Avoid probate, which can be time-consuming and costly.
- Maintain privacy regarding your family’s financial matters.
- Appoint a successor trustee to manage and distribute assets for your children if you become incapacitated or pass away.
- Provide for staggered or specific distributions (for example, allowing your child to receive funds for their health, education, maintenance, and support, or certain amounts at different ages). With a Will, your child will receive an outright distribution, or you may create a testamentary trust that requires court oversight.
- Upon the death of both parents, the trust becomes irrevocable. Because the trust is irrevocable upon the death of both parents, it can also protect your child from creditors.
Since the trust is revocable during the lives of both parents, you can amend or revoke it as your family grows or your circumstances change.
Plan for Special Circumstances: Special Needs Trusts
If your child has a disability or special needs, a special needs trust is an essential planning tool.
A special needs trust allows you to set aside funds for your child’s benefit without jeopardizing eligibility for vital government programs like Medicaid or Supplemental Security Income. The trustee can use trust assets to enhance your child’s quality of life by paying for medical care, therapy, education, and recreation while preserving public benefits.
Ohio law recognizes both first-party (funded with the beneficiary’s own assets) and third-party (funded by parents or others) special needs trusts. These trusts are very technical and require the appropriate expertise.
Review Beneficiary Designations and Insurance
Make sure your life insurance policies, retirement accounts, and bank accounts are updated to reflect your new family situation. Avoid naming your minor child directly as a beneficiary; instead, name your trust as the beneficiary so that assets are managed responsibly until your child is of age.
Plan for Incapacity: Powers of Attorney and Healthcare Directives
Estate planning isn’t only about what happens after death, it is also about protecting your family if you become incapacitated or incompetent. Therefore, you should consider the following tools:
- Durable Power of Attorney: A Durable Financial Power of Attorney is a document that can allow a designated agent to act on your behalf as it relates to your finances. These documents can be drafted to include limited powers or broad powers, depending on the situation.
- Health Care Power of Attorney: A Healthcare Power of Attorney is a document that can allow a designated agent to act on your behalf as it relates to health care decisions.
Revisit Your Plan Regularly
Your estate plan should evolve as your family grows. Major life changes, such as a new child, buying a home, or starting a business, are all reasons to review and update your documents.
Final Thoughts
Becoming a parent is a powerful reminder that the future matters. Taking time to put a thoughtful estate plan in place now can help protect what matters most — your child, your family, and your peace of mind.
At Critchfield, Critchfield, & Johnston, Ltd., we help new and growing families throughout Ohio create customized estate plans that fit their goals and values. Whether you’re preparing for your first child or updating your plan, our experienced estate planning attorneys are here to guide you every step of the way.
Contact us today to schedule a consultation and take the first step toward planning your family’s future.
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