Adding Children and Planning for the Future

Did you acquire a new child in 2021? If so congratulations! Adding a new member to the family is exciting and exhausting. As new parents there are a host of new items to attend to from 2 AM feedings to the seemingly endless string of medical appointments. While this is an exciting time it also requires some adjustments to your estate and financial planning. A few items that you need to be thinking about are listed below. The list is not all encompassing any your specific situation may vary.

Items to Discuss with Your Estate and Financial Planners

A few items to discuss with your estate planner and financial planner include setting up college savings plans, adjusting your life insurance, making changes to your wills and trusts, adjusting your powers of attorney, and checking for available government benefits. 

Getting a 529 Plan in Place

529 Plans are tax deferred plans that can be used to save for qualified educational expenses. The plans can be used to defer earnings on investments inside the plan and if the assets are used for a qualified purpose the earnings may never be taxed. There are limits on what the money in the plans can be used for so make sure you understand this and how it fits with your financial plan.

Life Insurance

Life insurance levels need to be adjusted for each party responsible for childcare. Working spouses should consider how much money their death would cost their spouse and their child or children and evaluate an appropriate level of insurance to compensate for their death in case of their untimely demise. Non-working spouses or caregivers should carry insurance in sufficient quantity to compensate for additional costs incurred by the family if they were not performing the unpaid services that they are currently performing examples include: cleaning, babysitting/daycare, cooking, shopping services, bill pay and financial management services. Also, beneficiaries should be updated to reflect the correct individuals, agents, or trustees depending on how your estate plan is structured.


If you already had a Will now is a good time to update it. Make sure that you discuss with your estate planner what will happen if your children are left without you. This includes who will be responsible for handling your children's funds and how they handle them. If you want special restrictions in place make sure that you discuss this with your estate planner. Who you would want to take physical custody your children were you to die? Is this the same as the other parent? If not discuss what will happen if you both die at the same time with your estate planner.

Powers of Attorney

Powers of Attorney generally come in two flavors, medical and property. Medical Powers of Attorney determine who makes medical decisions on your behalf. Property powers of attorney generally determine who may handle your financial affairs when you are unable to, although they may be effective prior to this point. The addition of a child may affect what powers you may want to grant under each power of attorney. Some parenting circumstances also dictate special temporary powers of attorney or guardianship provisions for children while parents are unable to make decisions such as when parents are on travel or are otherwise unreachable.

Government Benefits

Consider if any additional government benefits are available. Certain benefits, such as veterans disability benefits, may be impacted by additional dependents. Additionally, each State offers benefits that may be impacted by adding additional children. This is in addition to benefits that may result from tax benefits related to having children including the child tax credit and childcare tax credit. 


Considering your complete circumstances is something that a financial planner and estate planner familiar with the laws in your state can assist with. Starting with a solid financial and estate plan can help you get where you want to go and can give you peace of mind that your family will be taken care of should you pass.