Estate Planning - Baby, Baby, Baby
Where is that owner's manual? Is there a warranty on this thing? How do you get it to stop making that noise? Is it supposed to smell like that? Where are the handles? These and other questions come with the arrival of the first new baby in most homes. A combination of panic and "we've gone and done it now" takes over most new parents. Since this is a legal blog, I won't go into the intricacies of diapers, burping techniques or guaranteed sleep inducing maneuvers (for both baby and parents) - although with three sons I am a lesser expert in these things.
Where does the law stick its ubiquitous head into the new family? First, the parenting unit needs to look at itself and determine how they are aligned to each other. In the "old" days, it was just marriage and the child was the direct result (or at least that's what they told everyone) of the marriage. Simple. Now the mother and father may have never met in the biblical sense. Unless a parent has legally given up their rights in the child (through assenting to adoption or through donor agreements for non-gestational parents) then the biological parent has an interest in that child the day that it is born. My advice is to be crystal clear from the moment of conception (or before would be ideal) as to who's on first. With modern science's simple tools for determining paternity I would also suggest honesty is a good policy, not just hope that the kid will not have your next door neighbor's tell-tale red hair.
Next, the baby needs a name. Not to burst anyone's PC bubble I think that for legal purposes only a simple Anglo-centric first, middle, last name works best on a birth certificate. Practically speaking you can call your baby (and yourselves) anything you please under Massachusetts law so long as it is not intended to defraud others. So, Moonbeam Smith-Jones-Simmons-Wilson, is just fine. Legally? Mary Ann Smith will suit that child far better in the practical bureaucracy that is the American legal system. Trust me. Your child will thank you for it later. And it will save them from having to go get their name changed. Hyphenated names were cool in the 1980's, but now that those hyphenated people are marrying each other we have quite-a-hyphenated-mess-in-the-legal-world.
We have a parental unit. We have a named rug rat. Let the social security administration know. Most hospitals will provide information to you immediately at birth. If it's a home birth, then contact your local social security office or www.ssa.gov. Tell your health insurance company about the newbie as soon as possible too. Do not assume that just because you paid for a live birth that they are smart or organized enough to add junior to their mega computer. You could find this out the hard way if the babe needs some medical procedures done in the early months. Ask for a couple extra birth certificates; put them in more than one safe place, they always come in handy. Open a bank account in the name of the child within 30 days of birth. Seriously, go to the bank (send the father, he will need something to do), and open an account, even with $10. This will at least serve as a spectre of your lack of adequate savings for the spawn's trip to Harvard in 18 years. More practically, it lets you tell family that there is an account set up and gives you a place to start seeding a little bit of an account. Do it right now.
Another project for Dad (while Mom is doing all the hard work of recovering from child birth) is to get some life insurance. In Massachusetts, I can strongly recommend families to look at Savings Bank Life Insurance for quality, affordable TERM life insurance. I suggest getting this insurance from a reputable local savings bank. My favorite local bank is Cambridge Savings Bank (www.cambridgesavings.com). Snoopy's MetLife, John Hancock, Northwestern Mutual, Mass Mutual, Jefferson Pilot, Pacific, New York Life, and Guardian are all perfectly good companies. Your best bet is to get 20 year term life insurance for roughly 10 (yes, TEN) times your annual household income pre-baby. So, if you had a combined $150,000 household income before the baby, then you should have a $1.5MM policy on the primary wage earner and half as much ($750,000) on the stay at home parent. If both parents are working then I would suggest $1MM on each account for a changed lifestyle if one was to die. This term policy that you will own individually (or in a trust if you get fancy with planning) should be in addition to whatever life insurance that you have at work. Buy even more life insurance if you plan on having more children. I would suggest $500,000 per child (wage earner and $250,000 per child for caregiver) after you meet the ten times rule.
Look at your disability coverage at work. If it would not be enough for your family to survive if either parent were disabled then get some of your own too. Unum or Northwestern Mutual are the biggest and best players in this business. It is four times more likely that you will need disability insurance before you are 65 than you will need life insurance. Four times.
And get a will. Now. Don't wait. Get one right now.
Wills need not be expensive, use some of Juniors "college" money or christening/bris money if you get some - it's a good investment. Getting a will first means that you will consult with a competent estate planning lawyer. The lawyer should be able to give you all sorts of valuable information about life insurance, disability insurance, the use of trusts in estate planning, health care proxies, powers of attorney and if they have some real life experience they might give you some wise words to help you get on your feet. Estate planning lawyers, at least the ones I know in Massachusetts are lawyers with integrity that care about their estate planning clients.
Your will will include a provision for the guardianship of your minor child (that's the baby). This is the person, other than the legal or biological parents that would take custody of your child in the event of your death(s). Long discussions ending in tears have been known to happen on this subject more often ending in complete indecision than useful results.
My legal advice? Decide this within 30 days of the news that a baby is coming. Yes, 9 months ahead of the blessed event. You can't really make a will to that effect yet, but you can let the concept of these people assuming a parental role for your child sink in. In my legal experience, it is far better to name someone that you think could do an adequate job than to name no one or worse yet not have any will at all. While you are talking to the estate planning lawyer make sure you discuss how a trust might be useful for you. You should also get a simple; form oriented powers of attorney and health care proxies. With a baby in the house, your responsibilities extend beyond caring for the dog that you've been practicing parenthood on for the past three years. You're in the big leagues now. And there is no emergency exit.
The law will follow that baby throughout life. Just in the first year you'll have medical privacy forms, waivers for liability at day care, employment issues for outside caregivers, emergency care agreements (standby guardianships), 529 plan contracts, etc. Embrace the law and protect your baby with proper planning and good advice along the way. It is not expensive and estate planning lawyers are among the most approachable of all lawyers in Massachusetts.
Great story... puts in all in perspective. Better though to do it sooner than waiting 100 years!