5 Legacy Planning Basics for New Parents

It also makes a huge difference, because any account that has a beneficiary listed automatically avoids probate court. Think of it as a direct deposit; their money gets into the hands of whoever they designate that much faster. They can list a beneficiary on a 401(k), a life insurance policy or even a bank account. For bank accounts, it's called a "payable on death."

Once your clients have those two matters taken care of, they can cover the remaining tasks in waves. Whether they agree to tackle them within a few weeks or a few months, the important thing is you've gotten them to commit to planning for their future — and the future of their new baby.

3. Trust

It's a bit more work (and more expensive) to create a trust, but it has some wonderful benefits, particularly if your clients have young children.

Everything included in a trust is protected from probate court, including property, so their family can avoid the court fees and hassle.

Another great thing about a trust is that it adds an element of flexibility and customization to your clients' plans. Do they want their children to receive a lump at 18, 25 or 30, or do they want to distribute it over time? Do they earmark the money for a business venture or private school?

As the person in charge of the assets within the trust, their trustee will distribute funds according to their wishes.

4. Power of Attorney and Health Care Proxy

These are two separate documents, but they're both used in situations of incapacitation. Their power of attorney and health care proxy designees can make important financial and medical decisions when the clients are incapable of doing that. I grouped these two together because it's better if they know each other and work well together.

5. Life Insurance

Most clients don't even consider buying life insurance until they have children, so, if they haven't thought about it, they're not alone. They'll want to consider it now, particularly if they rely on two incomes.

Over the past 40 years, the percentage of dual-income households (with children under 18) has risen dramatically: 30% from 1960 to 2012, according to Pew Research Center.

If your clients are among the few who bought a policy pre-children, they'll want to consider increasing the amount, so their child is covered if something should happen.

— Read 3 Lessons Prince Left Agents and Advisors, on ThinkAdvisor.

Michael Babikian is the chief executive officer of LegacyShield, a financial services exchange built around a family information management system.