Did you know that most babies are born in September? If you’re like many of the families that have added a new member this fall, you should review the following new parent legal checklist:
Create a child care authorization
If you’re planning to leave your child with a nanny or relatives, you should consider signing a child care authorization to define the terms when others can make legal and medical decisions about your child.
Use Rocket Lawyer’s child care authorization if you’d like to authorize your child’s school to release your child to another individual or if you’d like to give authorization for another individual to make decisions regarding your child in your unexpected absence.
Update your estate plan
If you have recently added to your family, you should revisit your estate plan to ensure you are taking full advantage of wealth transfer opportunities and protecting your assets in the event of death.
Apply for a birth certificate
And get your child a social security number. Every individual born in the United States needs a birth certificate and a Social Security number. To apply for a birth certificate, you must complete a birth registration form—either in the hospital or at your local county public health department. You also need to get your child a Social Security number.
The simplest way to obtain your child a Social Security number is to apply for it at the hospital when completing the birth registration form. But if you miss those opportunities because of a home birth or other circumstances, you can complete these forms at your local county public health department.
Add your child to your health insurance
It may surprise some readers to know that your child is not automatically added to your health insurance plan. If you have employer-sponsored health insurance, you should check to see the deadlines for adding your child to your policy. Some companies allow for a 60-day grace period, while others require notice to be given within 30 days from birth.
Purchase life insurance
Most families don’t think about life insurance until they have their first child. There are so many choices when it comes to buying life insurance that deciding how much life insurance and what kind of policy to buy can be stressful. But life insurance is an essential safeguard for young families as it provides for a monetary payout to beneficiaries of the policy in the event of the insured person’s unexpected death.
You’ll want to investigate what type of policy you want (term or whole) and the amount of coverage. Often estate planners and financial advisors can work with your entire family to recommend a product that is the best fit for your circumstances.
Start saving for college
529 Plans are an excellent method to save for college in a tax-free manner. 529 funds are similar to 401ks and IRA accounts as any growth is sheltered from taxes. Unlike retirement plans, withdrawals from 529 plans to pay for qualified higher education expenses are tax free.
Even better, if your child gets a scholarship and does not need the funds for college, the beneficiary of the 529 plan can be changed to another family member.
Take advantage of tax breaks
The cost of raising a child to 18 years old can be as much as $250,000 so you should be aware of two ways to reduce your annual tax liability:
Additional Dependency Exemption
Even if your child is born on the last day of this year, you can file for an additional dependency exemption in that year ($4,000 for 2015.) A word to the high earners, eligibility for this exemption phases out when your Adjusted Gross Income (AGI) reaches $309,900 for joint filers and $258,250 for single filers.
Child Tax Credit
The IRS allows for a $1,000 tax credit for children. However, eligibility for this credit phases out at $110,000 for joint filers and $75,000 for single or head of household filers.