Experienced estate planning attorney, Douglas Lauenstein at the Lauenstein Law Firm provides suggestions on how aging parents can best prepare for their golden years with small children.
Couples who are remarrying are increasingly making the choice to raise children of their own. As a result, senior parenthood is becoming more and more common. If you are raising a baby later in life, you may need to make adjustments to your financial future in order to ensure that your child is well-cared-for and secure after you are gone.
Seniors who become new parents must expand their estate and retirement plans and additionally consider how childcare costs may affect their future finances. Other important considerations should also include a contingency plan for the care and well-being of the child in the event that the parents are unable to care for him or her.
If you are a new parent entering your golden years, you should take these steps to ensure that your estate plan provides your child with the financial stability he or she needs when you are gone:
Name your child’s guardian. Especially if your new baby is the result of remarriage, you may have other children for whom you have already named a guardian. If this is the case, this guardian may be an excellent choice for your youngest child as well. If the guardian you specified in a previous estate plan for your older children is no longer the best choice for your youngest, you may want to consider naming one of your adult children as your baby’s guardian.
Establish your child’s financial foundation. Building a trust for your child is a very wise financial move if you become a parent later in life. The likelihood is higher that you may pass away before your child becomes an adult. A trust will give you the ability to put restrictions on when your child receives the funds you have left for him or her, and how much will be dispersed at a time. If you would like to create such a trust, you will need to establish a living trust. You can be as specific as you want in stipulating how much money should be disbursed and when. Life events and ages are common choices for disbursement benchmarking.
Pay your retirement benefits forward. Even if you are already collecting Social Security benefits, do some research. If your child is a minor, or was diagnosed with a permanent disability before he or she turned 22, he or she may be eligible to collect some of your monthly benefits when you pass away. Because Social Security benefits cannot be deposited into savings accounts, you may also want to consider using your Social Security benefits to pay for childcare expenses, putting any personal savings you accrue into a bank account for future college funds.
Do your healthcare homework. Many retirees rely on Medicare to cover their health expenses. Unfortunately, children are generally not covered under retirement healthcare plans. You will likely need to purchase a private insurance plan solely for your child’s healthcare. You may also want to consider purchasing life insurance as an added assurance.
Use your age to your financial advantage. If you are a retired parent, you may be entitled to additional financial benefits beyond Social Security. Most retirees report a smaller income once they stop working full time. Lower income parents have a higher likelihood of qualifying for financial aid. In addition, savings accounts for retirees are often exempt from being reported as annual income, which will increase your child’s chances of receiving financial still further.
If you are a new parent approaching retirement age who is unsure of where to start in terms of financial and estate planning, consult an experienced attorney. They will advise you throughout the process, ensuring that your financial future is secure and clear.
For assistance with building your estate plan, contact the Lauenstein Law Firm today.