Holding my son for the first time

I thought this post was fitting since a pretty close friend of mine just recently found that they are having their first child.  You can never prepare for being a first time parent.  Diapers, baby crib, strollers…..it can be overwhelming.  Here’s another guest post of Joe Plemon of Plemon Financial Coaching offering some basic tips on preparing financially for your first child. And yes, that is my little buddy up top. Go ahead.  You know you want to…..Ahhhhh. Now to the post.

Q: We are going to have our first baby in a few months.  What things should we be thinking about that will help us be wise with our finances?

A: The following ideas should help:

Have a budget

I realize that everyone needs a budget, but if you don’t have one in place, now is the time to get it working.  The good news is that babies don’t cost as much as society tells you.  The not so good news is that, as money grows tighter with a little one in the house, not having a written cash flow plan in place can get you in trouble.  Turn the TV off and plan an evening with your spouse to prepare a budget.  You will be glad that you controlled your life instead of letting it control you.  Here’s a good budget read at Free From Broke.

Have proper life and disability insurance in place.

Ask yourself this question:  “If something happens to my spouse or me,  how will the remaining spouse be able to care for our child and continue to pay the bills?”   You probably spend more eating out in a month than life insurance and disability insurance premiums would cost, so you absolutely can’t afford to not have them. Here’s some other personal finance essentials from Patrick @ Cash Money Life.

Make retirement investing a higher priority than college savings.

You may be tempted to start a college fund right away, but don’t sacrifice your retirement investments.  Junior has lots of options to cover college expenses, such as scholarships, work  and attending community college and state universities.  What alternatives to retirement do you have?  Think Your Way To Wealth has the basics on 529 Plans and ESA’s.

Make a will.

If both of you die without a will, the courts will decide who cares for your child.  Is this what you want?  Make a will so you can name  the guardian that you want.  Not having a will is just plain irresponsible.  Do it today.

Securities offered through LPL Financial, Member FINRA, SIPC

I’m amazed at the number of meetings I have with clients or soon to be clients that have never had a will drafted. For many, the most common excuses I hear are: “I didn’t get around to it”, “I’ve been too busy, or “I didn’t think I needed it because I don’t have a lot of money to pass on.”A will is something that you must take a little time to set up even if you didn’t have a lot of property or money to pass on. Let’s see if I can give you some incentive of why you would want to draft one immediately. I have also sought the council from a local estate attorney, Carey Gill of Barrett, Twomey, Broom & Hughes & Hoke, LLP

Without a Will

First, let’s understand what it means to die without a will. To die without a will, the legal term refers to dying “intestate”, which means that you didn’t have a will drafted before you died, or your will doesn’t meet the requirements of the state law that you’re residing. When dying without a will, almost everything is subject to probate. Gill adds, “While probate is usually the standard, you may also pass $100,000 with a small estate affidavit with or without a will”. Probate allows for clean titling of your assets to go directly to your next of kin. One potential downside of probate is that your matters are made public and anybody is allowed to make a claim against your property. Another way of looking at probate is that basically everything that you have left over, you are leaving subject to your state government’s laws and regulations to determine how you wanted your property distributed. So, if you are comfortable having the state determine how your assets get split up, then probate might be okay for you. That still doesn’t mean you shouldn’t have a will.

Essentially, a Will Allows You to Accomplish 3 Things:

1. It allows you to give away your property that you own in your name the way that you want to.
2. It allows you to nominate an executor to take care of all of your last affairs as far as paying bills, et cetera,
3.  It allows you to nominate a guardian for your minor children.

Of course, if you do not have a will, then none of these will be accomplished in the way that you will see fit and will be subject to your state laws and regulations.

How Will Your Property Be Distributed

If you die without a will, than your property is distributed pursuant to your state laws, and will most typically pass to your closest heirs. But who are your closest heirs? That depends greatly on your family situation, and the intestacy law covers pretty much every possibility. Gill adds, “If you die without a will, the statue provides that your estate (anything that is in your name only) passes ½ to your spouse and ½ to your children. Is that what your intent is? Maybe, or maybe not.” These are things to consider. Further complications are step-children (they are not considered children under statue) and children from a prior relationship (they are considered yours). These are all issues that can be resolved and simplified from having a will.

Take The Time

One last to ponder is the estate tax benefits that that a Will or a Trust can provide. “So many times people tell me “I don’t have an Estate, why do I need an Estate Plan?”. It is unfortunate”, says Gill. Seeking some information on the basics of a Will and Estate Planning can be a huge comfort for you and your family.