1. Make a list of assets and debts and decide how you want to distribute your property. To get started, you can use the free Pennyborn.com estate planning worksheet.2. Choose a child guardian and property guardian. After choosing a guardian, create the documents to explain your choice of guardian. See letter to child guardian.3. Meet with an attorney to discuss estate planning forms such as a will, trust, power of attorney, and advance directives.
4. Meet with a financial planner regarding beneficiary designations on IRAs, 401Ks, college savings plans, UTMA accounts, annuities, and life insurance policies. Ensure provisions are in place to provide for your children financially.
5. Buy life insurance or increase death benefits under existing policies if necessary. If you have minor children, get legal advice on naming beneficiaries of your life insurance policies to make sure the proceeds are used to support your children.6. Make a last will. If you do not have a will, making one should be a top priority for the sake of your children.7. Review different types of Childrens Trusts. Establish and fund a living trust or another type of trust if recommended by your attorney.8. Set up a pet trust if you have pets.9. Execute a durable power of attorney for finances. If you become incapacitated due to an injury or illness, a durable power of attorney gives your agent authority to pay your bills, maintain your home, and ensure bills are paid for your children. See
power of attorney forms.10. Make a living will and health care power of attorney. To find information on making health care directives in your state, go to
medical decision laws.
Estate Planning Guide for Parents
If you are a parent and want to make sure your children are protected if something happens to you, read our free
Estate Planning Guide for Parents. It covers all the essential issues for parents, such as naming a guardian, making a will, deciding whether you need a living trust, naming beneficiaries on retirement accounts, buying life insurance, how to set up a pay on death account, and appointing an agent to manage your financial affairs if you become incapacitated.
Estate Planning Trusts
If you have minor children, a child with special needs or a financially dependent adult child, choosing the right type of estate planning documents is extremely important. In these situations, the best solution may be to create an estate planning trust to provide for your child's financial needs. An attorney can advise you on the advantages and disadvantages of various types of trusts.
For an overview of different types of trusts you may want to consider as a single parent, go to
other types of trusts.
Make Sure Children Are Not Separated From Pets
After the loss of a parent, a child relies on all that is familiar. This includes family members, friends, teachers, and pets. If your child is attached to your family pets, you may want to ensure your pets will still be in his or her life after you are gone. Since many people feel as close to pets as other family members, being separated from a pet after the loss of a parent can traumatize your child. For steps you can take, see pet owners estate plan.
Estate Planning Concerns for Single Parents
1. As a single parent, you must make estate planning a high priority. If your children do not have a second parent to rely on for their care and financial support, it is even more critical you take steps to provide for them in the event of your death or incapacity. See Dying Without a Will.2. If you die without a will that names a guardian for your minor children, a court will appoint a guardian and may grant custody of your children to someone you don't want. See guardianship.3. In the event of your death, your child’s biological father or mother, or your ex-spouse, may be granted custody. If you are concerned about this, consult an attorney to discuss your options. See finding an attorney.4. Minor children are not allowed to take ownership of assets beyond a minimal amount. If you fail to make informed estate planning decisions when naming beneficiaries of life insurance, bank accounts, retirement accounts, etc., a court will appoint a guardian of the estate to oversee property inherited by your children.Going to court to get property released or expenditures approved when a court appointed guardian is involved requires an attorney and is expensive. By executing the right estate planning documents, you can avoid this and ensure money left to your children is used for their benefit.5. If you become disabled or incapacitated, the lives of your children will be severely affected if you have not signed a durable financial power of attorney. If you are unable to communicate, pay your bills, and manage your other finances, your family or friends would have to go to court to obtain a conservatorship, unless you have legally appointed someone to serve as your agent in a financial power of attorney. See financial decisions.
Making a Living Trust
By establishing a living trust for your minor children, your assets in the trust will avoid probate and immediately be transferred to your trustee, allowing them to be used for the support and care of your children rather than being tied up in a lengthy probate proceeding. Livng trusts also allow you to define how you want trust property used, such as for your child’s education, medical treatment, travel, living expenses, clothing, etc.A living trust allows a trustee appointed by you to manage the property until your children reach the age they are to receive property as specified in the trust. To continue reading, go to
How to Name the Right Beneficiaries
While most single parents naturally want their property to pass to their children when they die, you should not leave property directly to minor children. To ensure money and property you leave your children is immediately available to take care of them and is not consumed by attorneys’ fees, make the right beneficiary designations.
Life Insurance. Do not name a minor child as beneficiary of life insurance. Life insurance companies will not pay proceeds to minor children and will require an expensive court process to appoint a guardian for the child’s property. See
guardianship. In the meantime, the proceeds will be unavailable to pay your child’s living expenses. To avoid this and ensure proceeds are immediately available to support your child, name your living trust as beneficiary of the life insurance. The trustee can manage assets in the trust for your child’s benefit. See Minor's Trust.IRA’s. Determining who to name as beneficiary of your IRA involves complicated tax planning issues. As a single parent, your options for IRA beneficiary choices include your children or your living trust. There are pros and cons to each choice. Consult a tax professional or financial advisor that understands your estate planning objectives. See IRA's and your estate plan.529 College Savings Plans. If you have a college savings plan, name a successor owner on the account. Name someone you trust to use the funds solely for your child’s education. If you die or become incapacitated, the successor owner has the right to do anything he or she wishes, including change beneficiaries and withdraw the funds. You may name the same person you chose as property guardian and trustee of your living trust to be the successor owner of the college savings account. While many 529 plans allow you to name a trust as successor owner, the tax and legal issues that must be addressed when a trust becomes the owner of a 529 plan usually make it an undesirable option, although there are advantages to holding a 529 plan account in the name of a trust in some circumstances.If you are unsure what form you need to complete to name a successor owner, contact the institution that holds your 529 account. When completing 529 forms, remember your child is called the beneficiary and the person you want to take over the account in the event of your death or incapacity is called the successor account owner or survivor. See college funds.
Wealthy Single Parents
The estate planning tips for single parents featured in this article do not include certain estate planning strategies that should be considered by wealthy individuals or parents with complicated estates. If you have a high net worth and your estate may be subject to
estate taxes, consult a tax advisor and an estate planning attorney.Copyright 2020 Pennyborn.com. ALL RIGHTS RESERVED.
INFORMATION ON THIS SITE, INCLUDING ARTICLES, ESTATE PLANNING FORMS, AND THE ESTATE PLANNING BLOG, DOES NOT CONSTITUTE LEGAL, FINANCIAL OR TAX ADVICE. Pennyborn.com is not a law firm and is not a substitute for a lawyer. Your use of this site does not create an attorney-client relationship. Information on this site is for educational purposes only and may not be accurate, complete or up to date.
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