Sunday, May 4th, 9pm, my wife’s water broke. We weren’t panicking as it was only 4 days earlier than her due date, and we were ready. If anything, that episode gave us some good giggles. We threw some more items in our already mostly packed bag and made our way to the hospital within an hour. My wife was admitted that night, and our son was born almost 24 hours later, on Monday, May 5th. 

So, I just became a father, here’s what I learned. Please note that the following list is based on my personal experience and does not represent a recommendation from our firm. 

 

Short Term Disability Insurance 

Mothers-to-be, if you are planning to have a baby, consider signing up for short-term disability insurance before you even start trying to get pregnant. Once you are pregnant, it is considered a disqualifying condition, and you can’t get insured (my wife learned this the hard way). Sometimes, your workplace will provide this insurance through your benefits, but you’re not enrolled by default. You can typically edit your work benefits during open enrollment, which usually occurs annually, or when you experience a qualifying life event. Adding supplemental short-term disability through work is usually affordable. 

If your employer does not offer it, you can get short-term disability insurance through a third party. It’ll cost you 1% to 3% of your salary. 

Once you give birth, the insurance will kick in and pay you anywhere from 40% to 70% of your salary. Under the insurance terms, you are considered disabled for 6 weeks if you gave birth vaginally, and 8 weeks if you gave birth via C-section. 

 

Maternity Leave 

Maternity leave is available in the US, but it’s not a universally guaranteed paid leave. The Family and Medical Leave Act (FMLA) provides up to 12 weeks of unpaid, job-protected leave for eligible employees, including those taking leave for the birth or adoption of a child. However, the FMLA does not require employers to pay employees during this leave. Employees are eligible for leave if they have worked for their employer for at least 12 months, at least 1,250 hours over the past 12 months, and work at a location where the company employs 50 or more employees within 75 miles. Whether an employee has worked the minimum 1,250 hours of service is determined according to Fair Labor Standards Act (FLSA) principles for determining compensable hours of work. 

Depending on the state you live in, you may be entitled to a longer leave and/or benefits. Living in California, my wife could benefit from Pregnancy Disability Leave (PDL). An employee who is disabled by pregnancy may qualify for State Disability Insurance wage replacement while unable to work (60% of your salary, up to a maximum of $1,681 per week). In a normal pregnancy, a worker will typically be disabled 4 weeks before the expected due date and 6 weeks after for a vaginal birth or 8 weeks after for a cesarean section. 

Following the PDL, my wife applied for Paid Family Leave (PFL) – Bonding. PFL provides benefit payments, but not job protection. If eligible, you may receive benefit payments for up to 8 weeks in a 12-month period. Benefits cover 60% of your salary, again up to a maximum of $1,681 per week. For the PDL and PFL, you have to apply on the edd.ca.gov website. 

At the employer level, my wife was offered a 6-month unpaid, job-protected leave. She added 4 weeks of PTO when California benefits stopped, so she could continue receiving income. Note that whether it’s at the federal level with the FMLA or at the (California) state level with the PDL or PFL, your employer is obligated to maintain your health benefits while you are on maternity leave, assuming your employer provides health benefits otherwise. 

 

Paternity Leave 

Fathers, you may also be eligible for some of the same benefits, minus the short-term disability one, of course. You are subject to the rules of the FMLA on the federal level. Being in California, I was able to apply for Paid Family Leave (PFL) – Bonding. The same rules apply as for the mother.  You have to apply for it on the edd.ca.gov website. You will need the hospital birth record to prove your relationship to the baby

 

Birth Certificate 

Before you are discharged from the hospital, you will be given a hospital birth record that you can use for more immediate needs (i.e., applying for benefits). However, it doesn’t replace the official birth certificate that you need to request for your baby. You can request it from your state department of public health (these can have different names depending on the state you live in) or the county where your baby was born. For us, we applied for it at the county. On the form, we were able to apply for his Social Security number too. 

Note that sometimes, hospitals contract with third parties to handle these administrative procedures for you. In our case, a notary expert was at the hospital and offered to help fill out the application, notarize it, mail it, and take care of the payment to the county for a fee (around $50). We thought it was worth paying, but it’s entirely up to you. 

 

Health Insurance 

Typically, a newborn is covered under the mother’s health insurance policy (if she has one) for a limited time (often the first 30 days). After that period, you need to add your baby to your existing plan. A birth is considered a qualifying life event, so you should be able to edit your benefits. If you are insured by a marketplace plan, you usually have 60 days to add your baby to your plan. If you are currently on an individual plan, you may need to switch to a family plan. 

After those deadlines, if you haven’t made that change, your baby won’t be insured. 

 

Passport 

If you fly domestically, your kid should not need an ID, let alone a passport. However, if you intend to fly internationally, you will need to apply for a passport for him/her. Here’s how it went down for my wife and myself: we filled out the form DS-11, booked an appointment at the local USPS office, brought the baby’s birth certificate and our IDs. A passport picture of our baby was taken there; we pay $100 to the US State Department and $35 to USPS. Finally, both my wife and I signed the form; and we were on our way. The passport as well as the original copy of the birth certificate should be mailed to our house within 6 to 8 weeks. 

 

Hospital Bill 

Just like any other medical visit, expect to receive a bill. Depending on your insurance, the hospital you deliver at, and the type of birth (vaginal vs. C-sections), you can expect a bill ranging anywhere from $1,500 to over $3,000. Ours was $1,543 for a vaginal delivery. Of course, if you pay out of pocket, costs can go up to $40,000 for a C-section. 

Don’t be surprised; know a bill is coming and set money aside for it. 

 

Dependent Care FSA Account 

As stated earlier, the birth of your baby is considered a qualifying event, so you can edit your employer benefits. If you plan on paying for daycare, see if your employer offers a Dependent Care FSA (DCFSA). The DCFSA allows you to contribute $5,000/year of pre-tax money if you’re married and filing jointly. That amount is reduced to $2,500/year if you’re married but filing separately. You can use that money to pay for daycare as well as other qualified expenses, tax-free. 

 

529 Account 

This might not be the most urgent item on this list, but you might forget about it as life gets busier and your kid gets older. As we say, there’s nothing like the present, especially if you count on that compounding interest effect. You can open a 529 account in the name of your kid and set automatic recurring distributions that you are comfortable with. Contributions will be invested and grow tax-free. Withdrawals are tax-free for qualified education expenses. 

 

Life Insurance 

Growing a family means you now have a little one who totally relies on you and will for a while. Getting life insurance is a way to protect your spouse and your child. There are different types of life insurance out there. Personally, my wife and I opted for term life insurance with slightly different terms. If you’re young and healthy, term life insurance is quite affordable. You can get covered for around $100/month (depending on conditions). 

Every situation is unique, and I would recommend you talk to a financial advisor to determine if you need an insurance, and if so, what coverage. When it comes to beneficiaries, I would add your spouse as the first beneficiary and your trust as a second beneficiary. If you don’t have a trust, I suggest you consider it. 

 

Trust 

The trust is the central piece of estate planning. It’s even more important if you have kids. The trust dictates how your estate should be distributed to your beneficiaries. One big advantage of having a trust is avoiding probate, which can be both lengthy and costly. 

For most people, a revocable trust is probably the way to go. There are multiple pieces to a trust, but when it comes to your child, there are a few things you want to pay close attention to. First, decide how you want your estate to be distributed. If I pass away and my kid is 10, when do I want him to get access to my estate? Should the distributions be progressive over time? Should the distributions be conditional? There is no one-size-fits-all; this is for you to decide. Second, pick a trustee. That person will execute your trust upon your passing. It must be someone you trust, who will respect your wishes. Third, pick a legal guardian. If both parents pass away, you need a trustworthy person to raise your kid until he/she reaches legal age. For the trustee and legal guardian, it is recommended not to pick your parents (unless they are young and healthy) as they are likely to pass away before you. Someone unhealthy is not recommended either. Note that you can edit your trust and change those key people at any time. It will cost some money in attorney fees. 

Some employers may offer legal services as part of their benefits. My wife’s employer offers this benefit through MetLife. For around $20/month, she can hire in-network estate attorneys to write our trust. Knowing that setting up a trust can cost several thousand dollars, she enrolled in that benefit upon our son’s birth. If you don’t know any estate attorney and want a recommendation, please contact us and we’ll be happy to give you one. 

 

Email Address 

This one is for fun and is not as important. I created an email address for my son shortly after he was born. My hope was that he wouldn’t end up needing to add a bunch of numbers or letters to his email address 15 years from now. Turns out I was already too late, as all the classic formats, including first and last names, were taken. Anyway… who knows if email will still be a thing 15 years from now? 

 

“Trump Accounts” for newborn children 

As I am writing this article, we learned that the Trump administration offered to create special tax-deferred accounts for babies born between January 1, 2025, and December 31, 2028. The government will contribute $1,000 upon opening, and families would be able to contribute up to $5,000 to it each year. This proposition is part of the “One Big Beautiful Bill Act,” which still needs to be voted on by the Senate at the time of writing. Based on the information we have today, it seems like these accounts would work quite similarly to a 529. We should know more soon. 

 

Conclusion 

Welcoming a baby into your life brings both joys and challenges. It can also be an additional source of stress, as it’s one more thing (person) you’re responsible for. What I’ve learned through my very short experience as a father is that planning ahead greatly diminishes that level of stress. Of course, you can’t plan for everything, and you will still be surprised. However, knowing that my family’s financial situation is in order, brings me peace of mind every time I leave my house. 

If you too are planning on growing a family and want to plan for its financial future, we’d be more than happy to talk to you. You can contact us here. 

 

 

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