One plot point in The Goldfinch (the movie version of this novel was released this year) involves a young boy whose mother has died and left him some money. In the movie, Theodore’s father coerces Theodore into calling his mother’s lawyer to ask that the lawyer to transfer a large sum of money to him. Theodore is to tell the lawyer that the money is for his own benefit but of course they father does not intend to use the money to directly benefit Theodore. The lawyer is unable to send any money because of the conditions Theodore’s mother outlined when she created a trust for him.
When you are a new parent and thinking about a precious life just beginning, it may not be easy to contemplate the end of your own but as The Motley Fool notes in “If You’re a New Parent, Take These 4 Estate Planning Steps” however, “Your baby is counting on you to provide — so take care of these essential steps.” And in Theodore’s case, as in real life, the estate planning steps a parent takes to provide for and protect a child financially can make a big difference.
Some things to consider:
Life Insurance: The money from a life insurance policy can be used to provide for the child should one or both parents die.
Naming a guardian: You may think of a will as a document to divide your resources, property, and possessions but this is also a document where you can name a guardian to care for your child(ren). If you do not choose a guardian then the courts or your family will make the decision.
Setting up a trust: A child cannot manage any inheritance they receive before the age of 18 so if you want to have a say in how the resources you intend for your children are disbursed, you will need to set up a trust. Whoever you put in charge of the trust will manage money and assets on your child’s behalf, however you can provide specifics such as deciding when they can get a direct transfer or setting money aside for a certain purpose like education.