Expecting? Here's a financial checklist

Amid the excitement and anticipation of a new member, each addition to the family should inspire advance financial and estate planning.

Kelly Perez, Director, Senior Wealth Strategist of Advanced Planning, suggested expectant parents may want to talk with their financial advisor and an estate attorney even before the child is born.

Before birth

  • Review your insurance—“You’ll want to talk to your financial advisor about determining the correct amount of life insurance coverage and who will receive the payout. For example, will the policy cover private schooling for the child? Will it cover lost wages, or pay bills or a mortgage, so that the surviving spouse won’t be burdened by debt? Will the proceeds go the spouse or into a trust for the child, or both? This is also a good time to review your short-term disability and long-term care coverage.”
  • Update estate documents—“You’ll want to be sure that wills and trust documents take into account existing and additional children. Also consider putting in place financial and medical powers of attorney so that your agents can make decisions for you in case you are incapacitated. You may also want to execute a HIPAA medical information release form, and maybe an advance directive, also known as a living will. These documents depend on state law.”

After birth

  • Guardian of minor children—“Depending on your state, selecting a guardian can be done in the will or in a separate document. Parents often choose as personal guardian the same individual they select as guardian of the estate, who manages the financial assets of the minor. It’s always good to have a conversation beforehand with the people you expect to appoint.”
  • Set up an education funding plan—“529 Plans, Uniform Gift to Minor Account (UGMA) and Uniform Transfers to Minors (UTMA), and Crummey Trusts vary in contribution limits and control over the timing, distribution and purpose of the assets. Every state offers a 529 Plan, or you can set up a 529 Plan with a wealth manager like UBS. With the recent tax reform, 529 Plan distributions can now be used to pay K-12 qualified expenses. Make sure to coordinate any giving with your own financial needs, as well as any transfer tax laws."
  • Revise your W-4 and work benefits—“Remember to review your contributions to your Health Savings Account (HSA) and Flexible Spending Account (FSA), as well as reviewing your employer-sponsored medical and life insurance benefits. You can also add your child as a beneficiary of your 401(k) plan. And don’t forget to look into whether your company offers a Dependent Care spending account. Be sure to consult with your advisor when you update beneficiary information on employer retirement plans, insurance policies, and other documents so that the changes coordinate with your overall estate plan.”
  • Notify your CPA—“Let your tax preparer know that there is an additional dependent. He or she will make sure you’re availing yourself of all possible deductions and credits related to the child.”

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