When I look back on my life I can’t help but remember some of my “firsts.” I can still remember most of them quite vividly. I remember the sun coming over the mountain ridge right before I harvested my first deer. My dad was whispering in my ear to calm my nerves for a steady shot. I remember my first time stepping onto my college campus to begin my college career. I was scared, excited and confident all at the same time. I’ll always remember the first time I met my wife, Kate. Little did she know she caught my eye and also my heart within the first few moments of meeting her. I guess you could call it “love at first sight.” This August Kate and I will be celebrating our first 10 years together. We have shared many “firsts,” but I doubt none will top the moment when she first shared with me that she was pregnant! That’s right, we are expecting, and for the first time in my life I’m going to be a Dad. When you get that kind of news you’re overjoyed, excited and honestly a little overwhelmed. Now, to really throw a twist into my story, we found out at our first check-up that we are going to be proud parents of TWINS. Talk about life throwing surprises at you, wow! Attached is our photo announcement, Kate and I love spending our winters on the mountain so from here on out “quad chairlifts only!”
When you get this kind of news, you can’t help but to start thinking about the future. We have so many hopes for our children. As expecting parents, there are many items to consider to build and protect the future of our kids. I thought I’d share not only my good news with all of you, but also these important tips to consider for others that may also be expecting:
- Life Insurance for Mom and Dad– While it’s highly unlikely that anything will happen to a young couple there is still a risk. Many different types of insurance plans available. I prefer lower cost term policies that are in-force for 10, 15 or 20 years. These policies typically have a much lower premium compared to Whole and Universal life policies. The idea is that you are insuring the risk while your children are young and using the money saved on premiums to save and invest to become self-insured in the future. Don’t forget to inquire with your employer to see if you can obtain a group policy. This will be your most cost effective option. Group policies typically don’t come with you if you leave your job so keep that in mind. Don’t make the common mistake to only carry enough insurance to pay off the mortgage. Consider the loss of the income in future years and if there is a stay at home parent there is monetary value to consider if they are no longer around to care for growing children.
- Disability Coverage– Again this is a highly unlikely event to happen, but it’s better to be safe than sorry. I prefer long-term disability policies over short-term. If premiums are paid with after-tax dollars then disability income is tax-free. That means you don’t need to insure 100% of your income. If you belong to any industry groups check with them first for group coverage then consult with an independent broker that can shop different carriers for an independent policy.
- Time for and Estate Plan– Many have the impressions that only wealthy or high-net worth people have an “estate.” That’s not true. We all have an estate that needs a plan in place in case something happens to us. With young children this need is escalated because if you’re anything like me you want to decide who will take care of your children if something happens to you and your spouse. Dying without the proper documents in place means that a judge will be making your decisions for you. Most attorneys or online sites that are less expensive such as www.lexproforms.com will put together a package for you that includes a Will, Trust (if needed), Powers of Attorney, Living Will and Guardianships.
- Review Beneficiaries– Accounts that have a named beneficiary like IRA’s, Roth IRA’s, 401k’s and life insurance will need a review. Couples often name each other as primary beneficiaries of each other’s accounts then list parents or siblings as contingent beneficiaries. Now that there are children in the picture the contingent beneficiaries may need some updating. Don’t make the mistake of naming a grand-parent in hopes that he or she will then give the funds to your kids. While they can likely be trusted to take care of your kids, the tax treatment will be highly unfavorable. Consider instead naming your trust as a contingent then the trustee can follow specific guidelines you’ve laid out.
- Education Planning– College will be here before you know it. Starting early can give your investment more time to grow which will mean you can start small now instead of trying to put away much larger chunks later. Everyone has different goals with education funding. Some want to fund all of their kids’ education, some a portion or some want their kids to work it out themselves. There is no right or wrong answer. If education funding is a goal of yours, consider a 529 College Account or most states have an Education Savings Plan available. Remember just because funds are going into the account doesn’t mean they are invested. You have to pick how the monies are invested. Consult with your financial advisor to determine your best route.
Those are just a few thoughts for expecting parents and even those with young children. I know these aren’t the fun items to consider, but they might be a life saver for your new family. The fun stuff is the cribs, baby clothes, high chairs, strollers, blankets from grandma etc. Just in case you’re wondering, grandma is sewing pink blankets…..that’s right we’re expecting twin girls! I hope you enjoyed this information and thanks for sharing your excitement with me. Please call us if you have any questions.
The information contained in this blog does not purport to be a complete description of the securities, markets, or developments referred to in this material. The information has been obtained from sources considered to be reliable, but we do not guarantee that the foregoing material is accurate or complete. Any opinions are those of Shaun Peterson and not necessarily those of Raymond James. There is no guarantee that these statements, opinions or forecasts provided herein will prove to be correct. This material is being provided for information purposes only and is not a complete description, nor is it a recommendation. Prior to making an investment decision, please consult with your financial advisor about your individual situation.