When you think about estate planning, you may think that this applies mainly to married couples with children and grandchildren. However, estate planning can also benefit single parents. Because some single parents may not receive financial support from the non-custodial parents or other relatives, they will need to be proactive about ways they can leave their children with a solid financial foundation should the parent pass away before the children become adults. Some single parents acquired an abundance of assets, and need a good estate plan to help them leave the best inheritance for their children. Here is how single parents can plan their estates effectively.
Choose a Guardian for the Children
This is essential in estate planning. You'll need to meet with an estate planning lawyer to name the person who will be the guardian of your children should you pass away. You want to choose a financially stable guardian, who knows your children well, and who would be willing to be a guardian. The guardian should also be someone who will apply structure, discipline, and unconditional love to the kids. If the potential guardian has major health issues, it might be difficult for him to take on additional responsibility.
Start a Trust for Your Children
Another thing single parents can do is start a trust for your children. While you'll be the primary owner of this trust while you're alive, it's a good idea to appoint a trustee over the trust in the event of your death. If you are leaving substantial assets to the trust and your child is a teenager now, you can request that he not receive the funds from the trust until he is in his 20s. Also, you might have the funds distributed in increments if you think he may not manage money well. Meet with your estate planning attorney to draw up a document stating the guidelines of your trust. You can fund the trust with cash and other assets such as stocks and bonds. You should also set clear goals for the trust so that the trustee will know exactly how you want the assets to be handled.
Don't Forget Power of Attorney
When preparing your will, you want to designate a trusted loved one to be the power of attorney over your affairs should you become unable to handle them due to illness. You should choose someone responsible and reliable enough to pay your bills, provide for the kids properly, and communicate regularly with the child's other parent. It is vital that you talk with the person you want to fill this role as well as your estate attorney regarding this issue.
Purchase Life Insurance
You should include life insurance as part of your estate plan. Funeral and burial costs are high, and you don't want to leave loved ones with a huge financial burden. When you designate your beneficiaries, they receive the funds directly. This means that your loved ones can avoid the tricky situations that come with probate. Also, your life insurance funds will be distributed to the beneficiaries tax-free. Don't just pick the first affordable life insurance policy you see. You'll need to research different companies to determine which one will be the best for you and your family.
In conclusion, these important strategies are going to ensure that single parents establish their estate plans and provide the best future for their children.
If you need assistance with estate planning, contact us. We offer the counsel you need to prepare your finances and other types of assets in such a way that you'll leave your children with a prosperous and less stressful future.