Your checklist for welcoming a new child
There are few occasions as joyous for a family as welcoming a new member. If you are having a baby, or preparing for an adoption, there is certainly a lot of planning to do.
But in the whirlwind of excitement and preparations, make sure to carve out some time to take care of other important matters and documents. Here are some to consider:
Apply for a Social Security number right away
You and your extended family may want to make gifts (of cash or securities) to your child, and you’ll certainly want to claim your child as a dependent for tax purposes. That will only be possible if he or she has a Social Security number. The easiest time to do this is when you apply for your child’s birth certificate; otherwise, the Social Security Administration may require proof of age, citizenship, or other documents.
Add your child to your medical coverage
It seems obvious, but in the whirlwind around the arrival of your child, it may be overlooked. We often see this in cases when the primary insurance-holder for the family is out on parental leave.
Most companies won’t let you add a child to your medical plan until after that child’s birth. In order for coverage to be effective as of the day of birth, you have to let the company know within a certain period of time, often 31 days.
Explore other benefits
Look into coverage for a healthcare spending account and a childcare spending account. Also explore whether your company has other plans, such as life insurance, that you may wish to take advantage of. You may also consider whether to change any other benefits elections.
Adjust withholdings and re-examine beneficiary designations
Make sure your withholdings on Form W-4 accurately reflect your growing family. Also make sure that your life insurance policies, retirement plans (including 401(k)s and IRAs) and other beneficiary designations are up to date.
Create or revise Wills or Revocable Living Trusts
Your Will is the document in which you can name a Guardian for your minor child should something happen to both you and your spouse. And either your Will or Revocable Trust can include provisions that control when and under what circumstances your children will receive their share of your estate.
Consider opening a Uniform Transfer to Minors Act (UTMA) account or 529 account
You can give each child a certain amount of money each year without paying gift tax or using any portion of your lifetime federal gift tax exemption. In 2023, that amount is $17,000. Consider making that gift using a UTMA, commonly known as a custodial account, or a 529 account (a college savings account).
Ask for advice
Everyone’s situation is unique, and preparing for the birth or adoption of a child can include a number of other important considerations. Talk to your advisor to ensure you are fully prepared to welcome your new family member.
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