Being a single parent is hard work. According to 2017 U.S. Census Bureau, out of about 12 million single parent families with children under the age of 18, more than 80% were headed by single mothers.
The two biggest concerns for a single parent in regard to estate planning are their children’s guardianship and financial management. Estate planning helps protect what’s most important to your life. A proper estate plan for a single parent should include a power of attorney for legal and financial matters; documents to plan for disability like a health care proxy and a living will; and a will and/or a living trust to designate how assets will be distributed and who will be the designated guardian(s) for the children and the trustee(s) to manage the trust.
Mistake #1: Not updating the guardian choices
As kids get older, so do the guardian choices. If the child is a teenager and the guardian is now in her 70s, would she still be a good guardian choice? Make sure that at every stage of life, the guardian selection is still the best choice to care for the child.
Mistake #2: Not putting assets into the children’s trust
After a lawyer creates the trust fund paperwork, assets must be transferred into the trust. Sometimes people forget to do this, but the reality is that there’s only value in having a trust if it’s funded. This blog explains how to do this.
Mistake #3: Early distribution of assets to children
Another mistake is the early distribution of assets to children when they’re still in their teens or 20s. It’s a good idea to set up staggered distributions so the children will receive assets at various stages of their lives (e.g., ages 25 and 30) when they’re likely to be more responsible with their money.
Mistake #4: Not updating all beneficiary forms
Once a trust is open for the children, it’s important to make sure that all of the parent’s beneficiary designations indicate that the children’s trust is the sole beneficiary. Accounts that have designated beneficiaries include life insurance, annuity policies, bank accounts, pay-on-death bank accounts, pensions, retirement plans, IRAs, and 401(k)s.
Being a single parent is hard enough. If you’re a single parent, let us help you with your estate planning so you can be assured that your children will be taken care of the way you want. Contact us at 617.299.6976 or mkarr@maheritagelawcenter.com, and we’ll make a free, no-obligation initial consultation appointment
