It takes two to make a baby, but sometimes there’s only one parent to raise a child. Whether it’s due to death, divorce or abandonment, many of the nation’s children are being raised by single parents.

It is important for single parents raising children alone to make sound planning decisions through conversation with their estate planning attorney/advisor about the decisions faced regarding who will care for their children should the single parent become incapacitated or die suddenly.

While every client’s needs are unique, here’s some basic advice for single parents:

• Select an appropriate guardian. Decide who will raise the children if the single parent dies or becomes incapacitated. This is critical if the single parent doesn’t have a spouse or co-parent to take custody. Without proper estate planning, a court would decide who to appoint as guardian. If the single parent’s chosen guardian doesn’t have the financial means to support the children, then the single parent should consider forming a trust to preserve assets for the children and to supply financial support for their care and education.

• Be adequately insured. Beyond paying the mortgage, saving for retirement, and securing a child’s educational and financial future, consider purchasing enough life insurance to be a strong source of support for their estate and to protect their loved ones from hardship. Disability insurance is also a good idea to protect the single parent’s financial needs, should they become incapacitated or unable to work.

• Plan for incapacitation. The single parent needs to designate a health care power of attorney and a durable financial power of attorney. Someone the single parent trusts must make medical decisions for them if they are unable to do so. If the single parent’s child/children are young, it is usually a relative or close friend who is assigned this role.

• Establish a trust for children. A trust ensures that the single parent’s assets are disbursed to the children according to his or her wishes. It’s worth considering to have the trust managed by a third-party trustee in order to avoid any family conflicts. The trust will allow the single parent to decide when and under what circumstances the assets are disbursed to the child/children.

• Ensure all estate planning documents are up to date. Review and update beneficiary designations regularly. Whenever there’s a major life event like a divorce, remarriage, birth or death, it’s important to make sure that these designations reflect the single parent’s current wishes.

When a person dies without a last will and testament, assets are disbursed according to the laws of the state. For married people, that typically means a surviving spouse inherits those assets, even if they’re not jointly titled. For a single person, the assets will be handed off by the probate court to close relatives (i.e., children, parents, siblings). When no relatives are available to inherit the estate, the single parent’s assets might even go to the state.

Let’s keep the state out of it, shall we?

The best way to keep the government from choosing the fate of a single parent’s assets is to ensure that single parents have the right documents in an estate plan drafted by an experienced attorney.

Don’t Ignore It

In the end, we know estate planning can seem like a daunting task for your single parents, especially the unmarried ones. Many ignore the problem, accounting for the large number of single people who don’t even have a simple will. They have special considerations that need to be addressed and many don’t have relatives to help manage things. Therefore, single parents are often in greater need of sound planning advice.

Contact Gary for assistance in setting up your estate plan – By phone @ 847.719.1300 or click here to contact via web form.

On July 30, 2017   /   estate planning, Living Trust   /   Leave a comment

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