Having a Baby: Top Five Legal Matters to Consider

When preparing for the birth of my oldest daughter, there were many aspects of the process I was wholly unprepared for. Actually, I was unprepared for just about all of it! However, when they skipped to the part about making sure things were in place legally prior to the delivery of the baby, my posture straightened and an aura of confidence overtook me. Finally they were speaking my language!

So what legal matters are important to consider if you are expecting a new bundle of joy?

1. Sign a health care proxy and HIPAA authorization.

These are important for the expecting mother to sign before the baby comes. These documents will permit the nurses and doctors to share certain information with your loved one and also ensure that someone is in place to make an emergency medical decision if something goes wrong during the delivery. In most cases, the hospital will ask if you have already signed these and will offer a standardized proxy if you have not. But beware, these boilerplate hospital forms often omit important authority. Healthcare documents drawn up by an attorney are typically more robust and provide you with better coverage.

2. Begin to think about legal guardians.

Designating an individual who would care for and make medical and educational decisions for your child if you became incapable due to an illness, or upon your death, will ensure that the courts do not make this choice for you. While this designation is typically executed after your baby is born, it is never too early to begin this planning process. Naming a legal guardian for minor children is the most common reason why many young couples prepare an estate plan.

3. Create or update your will and/or a trust to choose a trustee.

Aside from medical and educational care, you should consider who would manage any money or other assets you pass on to a young child. This could also include a large life insurance payout (see #4 below). Developing a trust plan and choosing someone (a trustee) to manage the trust funds for your child is a great way to provide oversight and protection until they reach a more mature age, can handle money, and make their own financial decisions. Without such a plan, the courts will have a say in how your finances are managed and will turn over control to your child when they attain 18 years of age.

4. Revisit life insurance.

You may have purchased an insurance policy to generate funds to pay off a mortgage or provide a spouse with additional income in the event you are not around. Adding a child into the mix is often another occasion to rethink your insurance needs to be sure there are enough resources to provide for their care, including educational expenses. Leaving your chosen guardians with sufficient ability to meet the needs of an additional family member can alleviate an otherwise stressful situation.

5. Update beneficiaries.

Now that your family is expanding, it is a good time to revise accounts with named beneficiaries, such as IRAs or 401(k)s and life insurance policies to include children. The preferred way to do this is by using the trust you created in #3 above. Naming a child directly, instead of a trust, could result in that account being subject to court supervision if the child is a minor at the time of your death. A trust as the designated beneficiary on the account keeps the control with your chosen trustee and out of the courts.

As you head off to that birth class to get informed about the road ahead, don’t forget to also make some time to address the legal matters too!

If you don’t have an estate plan yet, you may wonder if it’s the right time now that baby is on the way. Watch this video where my partner Tim Borchers, Esq., EPLS, AEP and I discuss, “Is it Ever Too Early to get an Estate Plan?”