My husband and I want to make sure that our baby has money in case we pass away. What’s the best way to do this?
Without a will, your kids will be entitled to their whole inheritance (or at least what’s left once it goes through probate) when they become a legal adult -- in most states, that’s at age 18. If you’re concerned that your children may blow all the money at once, or what attorneys call “squandering of assets,” then you can create a testamentary trust or a revocable living trust to stop the distribution of your assets until your children are more mature. You can also include a spendthrift provision, which will prevent your child from pledging their inheritance as collateral for a loan. Another great way to save money for your kids is to create an educational trust, or a 529 plan, which is a tax-advantaged savings plan designed to encourage saving for future college costs.
Plus, more from The Bump:
Saving Money for Baby
Financial Prep Checklist
How to choose a guardian?