When creating a revocable living trust, it is always advisable to fully understand all the permeation of what it means to name your ‘descendants' as beneficiaries. Why? Because at the birth of a new child or grandchild and sadly, at the death of one of your children, the language of your trust determines exactly what will happen. In the case of a new baby, your trust must identify your "children" as those named and any children subsequently born to me or adopted by me by legal proceeding. In the case of a new grandchild or if a child predeceased you, the language of your trust would need to state that our descendants are our children and their descendants, including any deceased child’s descendants. This same language would be needed if your estate plan were based on a Will.
If this language is present in the estate planning document, then it is probably not urgent to update your trust to include your new child's name. However, if the trust was drafted without that flexibility and only identifies your first child by name as the beneficiary, then you need to talk with your estate planning attorney and have your trust updated.
While you're at it, review your beneficiary designations for your life insurance policies and retirement plans. In those documents, you may have named your first child specifically as a beneficiary. If so, an update may be necessary. Although there are exceptions to this rule, it is usually not a good plan to name 'your estate' as the beneficiary of any retirement assets. If you do, it can have adverse income tax consequences after your death.
If you have significant retirement assets and want to name your beneficiaries’ trust share as beneficiary in order to gain additional asset protection for this wealth, consult with a knowledgeable trust and estate attorney who can counsel you regarding the best way to set up these designation to avoid adverse tax consequences.
Reference: New Jersey 101.5 (January 12, 2016) "Will another baby affect your current will?"