Why New Parents Need a Will

Video

Good morning, folks. It’s Andy Stautz at Stautz Law. I am back today for another talk about Indiana estate planning. Today’s topic is why new parents need a will. And this is a topic near and dear to my heart, because a few weeks ago my wife and I welcomed our first child.  

So we’ve recently redone our estate planning and lots of our friends are in similar spots. You know you’ve got kids, maybe new babies. Or maybe you’ve just been meaning to do it for a while. And it’s like. OK. Why is this on your To Do List?  

So I’m going to go through the what I think are the the biggest, most salient reasons. There are probably others. But I’m thoroughly persuaded all new parents need a will. Why?  

Reason #1: Avoid Leaving Property to a Baby

Reason #1 as soon as you have a baby. Your baby is now a 50% intestate heir if you die. That means if you die without a will the day after your baby is born, your baby is entitled to half of your property, not your spouse. Well, your spouse gets half, but your spouse doesn’t get everything. Is what I mean.  

A lot of people assume that their spouse is going to get everything. It’s not true. I made a video about that like a few weeks ago. So number one reason is to override the rules that you would get if you didn’t have a will.  

And the reason you want to override those rules is because it’s really inconvenient for a child to get a bunch of property. I mean you need to establish a guardianship for that property. And you know, if one spouse is still living, it’s not necessarily a huge deal, but it’s probably not what you want, not what you want to be dealing with. You know your spouse is going to be having the worst time in their life, right? You don’t want to be there trying to like set up that stuff.  

And if you were both to die, you really want to make some provision to avoid having your baby directly inherit a bunch of property, again because Guardianships are an absolute pain. And because when a guardianship ends at 18, it ends, and now you’ve got, you know, this young adult with no guidance at all.  

So avoiding intestate succession, avoiding guardianship.  

It Doesn’t Need to Be Complicated

You know you can put a testamentary trust in your will, so you don’t need to do a full, expensive trust planning right now. You just need a back stop. Like OK worst case scenario. You know, we’ve got this will that says where the property goes and in the case of both spouses dying, you can set up a trust like in the wills themselves, an emergency last minute, here’s what it does. Again avoiding guardianship, putting some structure around the inheritance so that you’re not leaving your child with a mess or a lump sum inheritance or whatever.  

Designating a Guardian for your Child

And the other reason also related to Guardianships is. You should use the chance in your will to designate a “guardian of the person.” So who’s going to raise your child? You know, that’s the remaining spouse, but in the event of a common disaster you want to. If you’ve got, if you’ve got an opinion on who raises your kid, you probably do. You know, you should put it down there  

So. Like I said, it doesn’t need to be complicated. I’m not saying every new parent needs to like. Come up with some complex plan. You know, do a trust administration, any of this. Just having a will to override the “half to kids” intestate succession half to spouse, half the kids just like. Having a will that says “all to my spouse.” It’s just a really important backup plan.  

Is It Worth It? Expected Value of Having a Will

And you know, we can, we can price out the expected value of that. You could say, OK, well, what’s the risk one of us dies while our children are minors. You know, whatever you think that risk is, if you’re an actuary, you can figure it out. What’s the cost? If we mess it up, we don’t have a will. OK, what does it will cost, you know, and I think it’s like insurance, right? It’s a backstop. It’s a worst case scenario plan. But the expected value is positive. You would be really glad you had it if you need it and hopefully you don’t.  

Building Good Habits: Beat the Procrastination

And lastly is you know it’s a start, right? For lots of people life events are triggers to start doing estate planning which they’re going to need to do at some point. And so it’s kind of good to have something down that you can revise later versus, you know, being older, having more complicated property and family affairs, trying to do everything for the first time. You know, you’re a grown up. Time to have an estate plan. It’ll save your family and loved ones legal trouble and emotional trouble.

Conclusion  

So that’s the pitch. Get it done. You know. Hire an attorney or or do it yourself, get something done. I think hiring a professional is worth it, but you know, cash is tight. That’s up to you. OK, that’s what I’ve got today. I think I’ll do a follow up on a “to do list” that includes more than just the will, because there are a couple of other things you want to do to make sure your property affairs are in order. That’s all for today. Thanks for watching.