When you have a newborn, life is often measured in three hour increments of when a baby sleeps and eats. As a new parent, you are so focused on your baby’s needs that you may overlook basic financial and legal matters that must be handled. Here are 5 essential things every new parent should do after the baby arrives:

1. Get life insurance

Getting life insurance is one of the first things you should consider after having a baby. Life insurance will provide funds to support your children and continue the lifestyle that your child and spouse have, if something was to happen to one or both parents. If you already have life insurance, review your current policy with a financial adviser to ensure that you have sufficient coverage for your growing family.

2. Set Up a Trust for Children

Update your living trust to include your new baby and provide for specific provisions which discuss at what age your child will receive their inheritance and for what purposes your assets should be used, e.g. for college education, starting a business, down payment of a home, etc. With a properly drafted trust, you can help your children develop financial independence by encouraging them to pursue an education, build their net worth and invest in their future.  A good estate planning attorney can help you update your trust or create one that will protect your children.

3. Name Guardians

Many parents think that estate planning is done only when you have a lot of assets. However, a properly drafted estate plan not only ensures that your assets are passed down to your children by avoiding probate and estate taxes, but that your children are properly cared for as well. Your estate plan should include a separate Guardian Nomination document where you designate a guardian for your minor children in case something should happen to you. If you don’t decide yourself, at your death, a judge who does not know you or your family will make that decision, and may choose a person you might have not chosen yourself to raise your child.

4. Maximize Your Tax Deduction

Parents are eligible to claim an exemption for each dependent child under the age of 19 (or if the child is a full time student, then up to 24 years old). For 2012, each exemption you claim reduces your taxable income by $3,800.00. You may additionally be able to claim a child tax credit of as much as $1,000 for each child under age 17; however, this is limited to couples who file jointly and earn combined less than $110,000. You may also be eligible for child-care tax credit, which you can qualify for if both spouses are working and your child is under age 13. Speak to your tax adviser to get more details and claim the most exemptions that you qualify for.

5. Add Your Baby to Your Health Plan

Since most health plans only give you thirty days after birth to add the baby to your to the plan, it’s essential to act quickly and do this right away. If you miss the deadline, you may have to wait until the next annual enrollment period and will incur medical bills that you’ll be personally responsible for.