Making financial provision is essential, says Carryl Beveridge
BECOMING a new parent is an exciting time which means all sorts of change for the whole family. Whilst updating your will and sorting out your legal affairs might not be at the top of your list of priorities at this busy time, it’s important to give these matters some thought to ensure everything is in order should anything unforeseen happen.
Making a will is essential to ensure that your children would be properly provided for and protected should anything happen to you. This is not only your opportunity to set out the financial provisions, but also to appoint a guardian who would be responsible for your child’s welfare should you not be around to do that yourself.
The appointment of guardians is undoubtedly one of the most important points which parents with young children need to consider. This might be a family member or a friend and can be more than one person. Along with the other points in your will, this should be reviewed on a regular basis, as your family’s circumstances change.
You might also wish to include some more detailed guidance for the guardian to set out your wishes for your child’s future care, development and education and this can all be documented alongside your will. In your will, you can set out the extent to which your children will inherit from your estate, and when. A straightforward trust should be included which stipulates the age at which you would envisage your children becoming entitled to their inheritance, although this can be flexible to allow payments to be made before then, to assist with ongoing costs, including the cost of your children’s education and/or the cost of their everyday maintenance.
If you don’t have a will or if the will doesn’t specify the age at which you wish your children to inherit, the law in Scotland says that they become entitled to their inheritance at 16 which, in the vast majority of cases, is unlikely to be appropriate.
As well as reviewing wills, you should also consider putting in place Powers of Attorney which cover your affairs during your lifetime. These are invaluable in the event that an accident or illness leaves you unable to manage your own affairs, even for a temporary period. A Power of Attorney would usually cover all of your legal and financial affairs, allowing for someone to pay bills on your behalf or manage your property, but it can also cover your welfare, to include making decisions on your medical treatment and care provision, should you be unable to make those decisions yourself.
It’s also a good time to look at your family’s overall financial position. As a parent, you will want to ensure that your child has the best possible start in life. Many factors will be out of your control but helping your children out financially is one thing that you can plan for, whether it be funding school or university fees, helping them to buy their first car, starting a wedding fund or building a deposit for a first home.
There are a number of options available if you want to save something in your child’s name that you then look after for them until they are of an age when they can start managing things themselves.
If you have young children, please do take a moment to consider whether these things are all in order. Whether you need to have a will drawn up for the first time, or need to review existing arrangements, this is unlikely to be a complicated process. It is important to take legal advice to ensure your family would be properly protected should anything happen to you. This will then allow you to get back to spending quality time with your family, hopefully with an easier mind, knowing your legal affairs are all in order.
A legal and financial checklist for new parents would therefore look like this:
• Put in place wills which appoint guardians for your children and include a trust to protect their inheritance.
• Put in place Powers of Attorney.
• Consider your pension position and check that nominations for death in service and pension benefits are up to date.
• Now that you have dependents, consider whether you should be taking out critical illness and life assurance cover.
• Consider putting in place a savings plan for your children.
• Carryl Beveridge is a partner with Morton Fraser www.morton-fraser.com