Estate Planning for Single Parents
Estate planning is an important part of organizing for a secure financial future for everyone, but especially for single parents. Single parents encounter many estate planning issues that are unique to their situation. Single parents usually accord the highest priority to the protection of their children, because the children are more vulnerable with no second parent to lean on.
If you are a single parent, pragmatic estate planning with the help and guidance of an experienced estate-planning attorney can ensure that your children are well-provided for in case of your incapacity or death. Here are a few fundamentals of estate planning that you must keep in mind as a single parent:
- A Will and A Trust
For single parents, one of the most critical documents in estate planning is a will. A will enables a single parent to name a guardian for their child after they pass on. This step takes on even more important connotations if the other parent is either already deceased or unable to care for the child in the event of the single parent passing away.
There are several reasons why a trust may be worth considering:
- the beneficiaries of a trust will not need to wait a long time (often lasting for months) for the proceedings of a probate court to be completed
- if the parent is incapacitated or passes away, a trust ensures that a trustee can start managing the assets at once
- a trustee can hold the assets in trust for the education, health, and maintenance of the children until the time they become adults
- Life Insurance
Investing in supplementary life insurance cover can ensure adequate financial backup for the children of single parents after they pass away. If you are in the single parent category, consult with your estate planning attorney to build up a plan that can protect the proceeds from your life insurance policy so that your children can reap the benefits for a long time after your demise, while also avoiding tax burdens.
- Durable Power of Attorney
A durable power of attorney is a document that can be used as a part of incapacitation planning and involves appointing someone who makes health care and financial decisions, should the single parent be incapacitated to do so. For instance, the document may allow an agent to pay bills on behalf of the children from the incapacitated single parent’s accounts.
By appointing an agent to help handle your financial affairs, you ensure that your children can continue to live life without the burden of bills and can access funds to buy necessities. Single parents can talk to their estate planning lawyer about the steps that can be taken to ensure that their children are taken care of if something befalls them, and they are unable to do so. A trust, if drafted well, can also take care of these financial issues in the event of a single parent becoming incapacitated.
- Beneficiary Designations
Most of the retirement accounts, and some other assets like life insurance and pensions, do not go through probate but are passed on to the beneficiaries directly. If you are a single parent, you need to plan with your estate planning attorney to protect these assets for the benefit of your children because your minor child cannot inherit these assets before they are of legal age. Trust is one of the best options to protect these assets until they are available to support your children.
When you designate beneficiaries, you must ensure that you do it in such a way that it not only benefits your children but also works well with your estate plan. Naming a trust as the beneficiary of your retirement accounts and life insurance ensures that your children have access to those funds and the person designated by you is in charge of those funds for the benefit of your children.
- Business Succession Planning
If a single parent is also a business owner, they need to create a business succession plan as part of their overall estate planning. A business succession plan can facilitate the operation of a small business for children’s benefit after the death of a single parent. The business can be the source of income for children until the children are ready to inherit it when they become of legal age.
A business succession plan can also provide for an effective way to close the company and liquidate its assets after the death of a single parent if it is in the best interest of the children.
Hire Knowledgeable Estate Planning Attorneys in Louisville, KY
The basic parental instinct to protect your children heightens when you are a single parent. Facing the unpleasant thought of not being around for your kids, create a suitably fitting estate plan that gives you peace of mind and fully benefits your children.
If you would like to learn more about these estate planning vehicles, John H. Ruby & Associates is here to help. To get started, message us online or call our office today at (502) 373-8044 to speak to one of our attorneys.