Parents-to-be are busy with juggling doctor’s appointments, preparing a nursery, picking out names, and getting ready for their lives to change. However, there’s more. When expecting a new addition to the family, parents need to address the more serious aspects of this milestone. That means taking care of legal, financial, and insurance matters to protect the family.

U.S. News & World Report’s recent article, “Financial Steps to Take When You’re Pregnant” reminds us that pregnancy is a terrific time to review your financial life. It’s a great time to assess your budget, emergency savings, estate planning documents, and insurance needs to see if anything needs to be refreshed.

Here are a few things to do to prepare for a new baby:

Employee Benefits Take a look at your employee benefits or have a conversation with HR to determine how much time you can take off and whether you’ll be paid your salary, while on parental leave. This is important because many families are faced with higher living costs by the presence of a new baby, as well as taking parental leave that may cut their take-home pay. New parents may have to use the Family and Medical Leave Act (FMLA), which offers eligible employees 12 weeks of unpaid leave; or tap short-term disability insurance, which typically only replaces a portion of your salary. 

The amount you receive in short-term disability will also be impacted by whether you pay premiums with pre-tax or post-tax dollars. If you pay with pre-tax, your benefit will be subject to taxes, decreasing the overall amount received.

While reviewing these policies, look at your health insurance and see whether prenatal visits and pediatric care are covered. You could be liable for health insurance premiums if you’re taking leave from work. During the first 30 days, your newborn will be covered under the mother’s medical insurance. Before the 30 day period ends, you should check with your medical insurance on the monthly medical premium cost to add your newborn to your plan as you will need to start paying a new premium on day 31. If the premium is too costly to add a child onto your plan then you may want to look into alternate medical insurance plans before the 30-day period ends. You want to make sure that there are no gaps in the medical coverage as a newborn will need to have a few well visits after discharge from the hospital.

Budget Calculate new baby expenses, such as childcare.

Life Insurance Determine if your current life insurance will meet your needs. If you need more, look at term life insurance. It’s usually affordable and expires after a set term, typically anywhere from 10 to 30 years. This policy payout would help a surviving parent or guardian care for your child.

Estate Planning Consider who would care for your child, if both parents were to die before he or she turns 18. Talk to family or close friends about who you’d like as guardian of the child. Talk to an estate planning attorney to update (or create) a will and guardianship choices. 

In addition, ask about formulating a plan for how inheritance, insurance, and other assets will be handled and disbursed, if you die while the child is a minor. A testamentary trust is a way to direct a future inheritance. You can designate your child as the beneficiary and a relative or close friend as the trustee. The trustee will help decide how the money is spent. This trust is usually included in the will and activates after the death of the person who created it.

Beneficiary Designations Update any beneficiary designations on your retirement and insurance accounts.

529 College Savings Account It’s hard to imagine how fast a newborn turns into a child packing for college, but it happens in the blink of an eye. Once the child is born, open and begin funding a 529 college savings account, and encourage grandparents to make contributions.

Contact Grimaldi Yeung Law Group today before your new bundle of joy arrives.

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