NEW YORK (CNNfn) - You just returned home from the maternity ward with your first bundle of joy in your arms and the house is stocked with diapers and baby formula -- now's the time to sit down and draft a will.|
Especially during this period of newfound delight, writing a will may be the furthest thought from your mind. But who will take care of your child if you and your spouse both die unexpectedly?
Young couples tend to put off writing a will because they get caught up in their new roles as parents. Also, because people are living longer, healthier lives, they're less likely to think about becoming ill or incapacitated.
Who will watch over Johnny?
If you die without a will -- a status known as intestate -- you leave it up to the state to decide who will take care of your child, said Scott Carr, vice president of marketing for Savewealth.com, a division of The Preservation Group, a consulting firm in California that helps people build estate plans.
Many people with new babies name their own parents as a legal guardian in their wills, said Mike Palermo, an attorney and certified financial planner. However, the grandparents typically die before their children.
To get started finding a guardian for your baby, here are some questions to ask yourself from Nolo.com, a self-help law center and legal publishing company on the Web.
- Do you have confidence in the prospective guardian?
- Is your choice physically able to handle the job?
- Does he or she have the time?
- Does he or she have kids of an age close to that of your child?
- Can you provide enough assets to raise the child? If not, can your prospective guardian afford to raise the baby?
Also, you may assign a different person to raise your baby from the one who will watch the checkbook. Your brother may provide the most stable environment for your child, but a close friend may have a better perspective on financial issues. You should make sure the two people can work together.
Whatever you choose, it's important that you and your spouse discuss these issues and decide before writing the will.
Once you've answered these questions together, you're ready to draft a document with the help of either a lawyer or online software that can walk you through the process.
Drafting a will can be fairly simple, depending on the amount of assets you have and how you plan to divide your belongings among your heirs, said Mike Janko, executive director of the National Association of Financial and Estate Planning (NAFEP).
Typically, each spouse leaves all of his or her belongings to the other in separate wills.
Setting up a living trust is another option if you wish to leave valuable property or your investments to your child. Establishing a trust with the child named as a beneficiary preserves the property for him. Also, you may establish an age when the child may regain full control of that property, and you can stipulate how the child can spend the money.
Before contacting a lawyer, get out the calculator and figure out how much you and your spouse have. Estimate your assets by adding up the worth of your material property including your home, furniture and car, plus your savings and retirement accounts, then subtract your debt.
And writing a will doesn't have to be harsh on the pocketbook. Depending on where you live and how complicated divvying up your assets is, drafting a will with a lawyer may cost between $200 and $1,000.
Where to go
Check with the American Bar Association to find attorneys with expertise in probate and estate planning. Also, you can contact the Self-Help Law Center, which has an abundance of legal information about how to draft a will and other estate planning issues.
With an abundance of Web sites, retirement software and "how-to" books on the shelves, writing a will today is much easier than it was years ago.
"People are banking online, investing online, so they have easy access to their accounts," Carr said. "Most of the time can be spent pulling out the calculator and finding out your net worth."