08 Sep Estate Planning for Single Parents: Jacob Wooley, Partner
No two Estate Plans are the same. Each person has unique needs that must be met to form a complete plan. This is especially true for single parents. Raising a child is a tremendous responsibility. Raising a child alone is an even greater challenge. When I work with a single parent, there are at least two specific issues we must tackle, and these are not always easy discussions.
Guardianship (custody) is possibly the most difficult topic to talk about, but it is of utmost importance. There are two situations in which custody must be addressed: temporary or permanent disability and at time of death.
Disability: The Social Security Administration estimates that at least 1 in 4 Americans will experience a temporary or permanent disability situation that leaves them unable to care for themselves or their loved ones. Providing, IN ADVANCE, for who will care for your children during these times lessens the stress of an already painful situation. Completing an official Declaration of Guardian puts “agents” (caretakers) in place to pick up the torch and carry on with paying bills and making medical and general life decisions in your absence.
Death: While we hate to talk about the possibility of not raising our children, the unfortunate reality is parents of all ages pass away. If you were to die before your child reaches the age of 18, there are specific decisions that need to be made IN ADVANCE regarding guardianship (different than those for times of temporary or permanent disability) as well as addressing details of how you want your child raised. Minor children cannot directly inherit assets of any kind; it is important that you detail your specific intent regarding how the proceeds of your estate should be managed to provide for your child’s care. Improper planning can lead to the proceeds of your estate being tied up in the Court’s registry or being mismanaged by an irresponsible family member. Simply having a will and naming your minor child as the beneficiary is just not enough and often leads to disastrous results.
Life has a way of changing rapidly. One minute a child is starting kindergarten and the next graduating from college. As a single parent, it is very important to keep your Estate Plan up to date thereby reflecting life’s changes. Two of the most common life events that necessitate an update are familial structure changes and children reaching adulthood.
Familia Structure: If you get married or enter into a co-habitation situation, you will want your Estate Plan to address your spouse/partner, you premarital/pre co-habitation assets as well as your child and any potential step-children. If you don’t do this, accidental disinheritance can take place, assets can become co-mingled, spouses/partners can be forgotten, and guardianship arrangements can become outdated.
Adulthood: Once your child reaches adulthood, you want to make sure your plan addresses the appropriate age at which they would DIRECTLY inherit from your estate. A customized plan noting distribution desires like annual stipends, education funds and more becomes very important once your child reached 18 years old.
Many single parents rely on informal agreements in which friends and family members say, “if you get sick or die, I’ll take care of the kids.” Bluntly, these agreements are not good enough. Taking the necessary steps to formalize a comprehensive Estate Plan including a Declaration of Guardian in Advance is the only way to legally provide a care plan for your child.
As a single parent, you have a great responsibility. Check Estate and Guardianship Planning off your list.
Have questions? Contact us or leave a comment below.