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Baby's birth prompts estate planning Add to ...

Building Blocks is a special personal finance web series geared towards educating families on money-related topics. A collection of stories, videos and discussions, Building Blocks will run online until the end of December. For a video on the topic of the importance of estate planning for a family with children, click here.

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Like many young couples, Jeffrey and Michelle Levine waited until the arrival of their baby girl before making a will.

As parenthood shifted their priorities, establishing an estate plan moved to the top of their to-do list. The newfound urgency is common among new parents: the Levines wanted to make it clear who would take care of little Robyn if they both were to die prematurely.

"When you have a baby and start a family, you definitely start thinking about the life cycle more," said Ms. Levine, a 27-year-old research analyst for the provincial government, who's currently on maternity leave.



We did it mainly to make it clear who should take care of Robyn. Jeffrey Levine, a new father on why they updated their family's will


Addressing your own mortality isn't easy, especially when you would rather imagine a future of watching that tiny baby grow into a toddler, teenager and eventually an adult. All parents want to look after their children; but part of that task should include addressing how the kids will be taken care of in the tragic event that their parents pass away.

It's rare, of course, but car accidents and illnesses do happen. If that were to occur, those with a will would have left specific provisions for the care of their children. The guardian that the parents selected would step in right away and take care of the kids. And the kids would also be looked after financially in the way the parents wished. Without a will, everything gets much more complicated.

"We did it mainly to make it clear who should take care of Robyn," Mr. Levine, a 28-year-old lawyer said. "Because it's our child we're dealing with we didn't want to screw it up."

Choosing a guardian for a child or children is probably among the hardest decisions a parent will make. They must find someone they believe will be best suited to look after their children. That means they have to consider such diverse issues as age, their views on raising kids and life in general, their finances, and the place they call home.

It goes without saying that there also must be an immense amount of trust in that individual. People often choose a family member or a very close friend.

After making the choice, the next step is to ask the selected person if they're willing to take on the job. It is a big duty. Some people, while honoured, might not want to raise a child. Even after the chosen person is named as the guardian in the will, parents should review their choice every so often and check in with the person to make sure they're still up for the task, experts say.

There is always the possibility that someone could challenge the guardianship (including the court), but such disputes over the children are a lot more likely when parents don't leave a will that sets out their wishes. Then it is up to the family and the court to determine who should be the guardian. If no one steps up, Children's Aid Society will get involved and find a home for the children in foster care.

Providing for one's children also includes their financial future. A key tool for this is a will. Parents can create a trust for their children's inheritance and dictate when the money will be paid out. It could be when they reach certain ages or achieve a level of education, for example.

"The main purpose is you're able to control the asset from the grave," said Andrea Thompson, associate estate planning adviser at Raymond James.



The main purpose is you're able to control the asset from the grave. Andrea Thompson, associate estate planning adviser


Through a will, the parents can specify who they want to look after their children's financial assets, either the guardian or a separate trustee. It is a big job in itself because the trustee will be in charge investing the assets, using them to take care of the child's everyday needs, and then giving them the rest of the money when they hit the milestones set out by their parents.

Going without a will puts the government in control of those assets until the child hits a certain age (18 in Ontario), at which point they get everything. And it's not hard to imagine how quickly some young adults could spend their inheritance.

"If you do a will, you can draft a clause that says the child won't see any inheritance until 25 or later," says Aaron Grinhaus, a new father who has just embarked on a law career. "That way you make sure the child is responsible enough."

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