In many respects, estate planning for single parents of minor children is similar to estate planning for families with two parents. Parents with minor children want to provide for their children’s care and financial needs. But when only one parent is involved, certain aspects of an estate plan demand special attention. If you’re a single parent, here are five questions you should ask:
1. Are my will and other estate planning documents up to date? If you haven’t reviewed your estate plan, including any wills or trusts recently, do so as soon as possible and regularly to ensure that it reflects your current circumstances. You want a court to have to decide how to allocate your assets or determine who should care for children who were not born at the time you initially created your estate plan.
2. Have I selected an appropriate guardian? If the other parent is unavailable to take custody of your children should you become incapacitated or die suddenly, does your estate plan designate a suitable, willing guardian to care for them? Will the guardian need financial assistance to raise and educate your children? If not, you might want to preserve your wealth in a trust until your children are adults.
3. Am I adequately insured? With only one income to depend on, you need to plan carefully to ensure that you can provide for your retirement as well as your children’s financial security. Life insurance can be an effective way to augment your estate. You should also consider disability insurance as an way to address your needs in case of incapacity.
4. What if I become incapacitated? It’s particularly important for you to include in your estate plan an appropriate directive to specify your preferences for the use of life-sustaining medical procedures and to designate someone to make medical decisions on your behalf. You should also have appropriate powers of attorney or other estate documents that provides for the management of your finances during any period when you are unable to do so.
5. Should I establish a trust for my children? Creating a trust can be one of the most effective ways to provide for children regardless of their age. Trust assets are managed by one or more qualified, trusted individuals or corporate trustees, and you specify when and under what circumstances funds should be distributed to your children. A trust can be particularly useful if you have minor children. Without one, your assets may come under the control of your former spouse, the child’s other parent or a court-appointed administrator.
If you’re a single parent, we can help answer your estate planning questions.