Taking the time to formulate an estate plan can often seem like a daunting process. This is particularly true for the single parent. The single parent is likely struggling to balance the demands of taking care of the children, home and working a job outside of the home. With these struggles the mere thought of adding anything to their to-do list may seem overwhelming. However, taking the time to develop an estate plan will likely ease some stress since the plan can help ensure that their children are provided for according to their wishes in the event of their demise. Some of the most valuable steps to consider implementing are:
- Drafting a Last Will: This document provides specific instructions to loved ones and family members on how assets should be distributed upon your demise, and can provide that assets not be distributed to your children until they have attained a specific age. A Last Will can incorporate that the assets being held in a trust for the benefit of your children. Within the Last Will you will be able to select who will handle the affairs of your estate and administer any trust for your children (act as Trustee(s)).
- Appointment of Guardians: Arguably, the most important step when creating an estate plan for the benefit of young children is to determine who will be the guardian of the children. It is often recommended to choose guardians that are in a similar age group to the parent, or younger. It is important to keep in mind that if the other parent is alive and willing, that individual will likely gain custody of the children regardless of who is nominated as a guardian.
- Drafting a Revocable Living Trust: A revocable living trust allows the creator of the trust to remain in control of the assets while he or she is alive. It can also manage assets in the event of one's incapacity and also specify who is to receive the assets upon death. This legal tool can also help to ensure that children and young adults do not receive a large inheritance before they are ready to manage the assets. The revocable trust can have a continuing trust for the children until they have attained a certain age and/or for their life while permitting the trust assets and income to be used for the health, education, maintenance and support of the child.
- Utilizing a Special Needs Trust: If one has children with any incapacities or disabilities, it is most important to consider utilizing a third party special needs trust (SNT) for said child. This will help insure that the fund held in said SNT can be utilized for the special and supplemental needs of the child without impacting his or her eligibility for medicaid, SSI or any other federal or state program.
These are just four of the legal tools that can be used to help better ensure one's children are protected. Other tools that can provide additional guidance are advance health care directives, which allow the creator to name an individual to make health care decisions on his or her behalf in the event of incapacity, and a power of attorney for financial affairs, allowing an individual to control bank accounts and other finances when you are unable to do so. It is also wise to review beneficiary designations on life insurance and retirement policies and update them if necessary.
Those who are putting together an estate plan are wise to seek the counsel of an experienced estate planning attorney. This attorney can review your situation and help guide you through the process, better ensuring a plan that is more likely to reflect your wishes.