As a single parent, you need to know that a proper estate plan can protect your assets to ensure that they are distributed according to your desires. Even if you think that you don’t have much in assets or even insurance, an estate plan is critical if you have minor children.
This is critical for a few reasons:
1) An estate plan not only directs your assets, it also includes a section to assign a guardian for your minor children. If you are unmarried, then you need to ensure that you legally determine who will get custody of your minor children. If you do not do this, then the State can take your children and place them into foster care. This is a scary thought considering the quality of the foster care system. Therefore, if you want to ensure that your children are placed with someone you trust, who will raise your children, and love your children as you would, then you must complete the guardianship forms. Do not assume that the State will place your children with a grandparent or family member as this does not always happen. I recently ran across a story where even though the children were living with their grandparents while their mom was in the hospital prior to her passing and the grandparents were fit to have custody, the State still look the children and placed them in foster care. The grandparents tried to raise the money to pay for court fees and a lawyer to fight for custody and to stop the kids from being adopted by strangers.
2) Your income, assets, and insurance will be managed by someone you trust. If you are a single mom or dad, then you need to make sure that you set up a trust for the benefit of your child. You should pick a person with integrity and solid money management skills that will ensure that your money is used for the health, maintenance, and well being of your children and if possible manage it so they have some left over that they can access as an adult. This person doesn’t have to be the same person that you choose as their guardian.
3) It helps to reduce the likelihood that your children will be used as pawns. Whoever is assigned to be guardian of your children will also manage their assets unless there is a trust with a separate trustee. This is important because if the child’s other parent becomes the children’s guardian, then s/he will be responsible for managing your assets. This stuff is real. I have heard of a story where an absentee father established guardianship of his kids upon their moms passing even though he never attempted to have a relationship with the children nor contributed financially. He popped up because he knew that the children’s mom had a life insurance policy and wanted access to the money. Therefore, you want to protect your assets to ensure that whoever desires guardianship wants to do so for the right reason.
4) You want to leave money or assets to someone other than or in addition to your children. Unless you say otherwise, all of your assets are assumed to flow to your children. Therefore, if you wanted to leave some money or assets to another family member, charity, or organization you must explicitly say so in either a will or trust.
5) A trust helps you avoid probate. Court and lawyer costs are expensive, and some people are selfish and greedy. I’m sure you have seen the horror stories where people pop up out of nowhere to challenge the will. Putting your assets in a trust helps to stop some of those challenges and by avoiding court, you avoid the costs, a public record of your assets, and you are able to keep more money that can be used for the health, well-being, and maintenance of your children.
6) You can have more peace knowing that your children are protected. As parents, we want our children to be safe and protected and we do whatever we can to ensure that happens. However, what happens if you aren’t here? It’s hard to think about not being here, but no one knows how long we have so it’s best to make sure that our kids will be OK. Setting up a solid estate plan helps to protect the children even if we are not here physically.
7) You can stagger payments to your children. Think about how well you managed your money when you were younger. Can you imagine what you would have done with a lump sum payment when you turned 18? You can direct payouts to ensure that your children receive any remaining cash when they are older and would allegedly have better money management skills.
Located in Merion Station, PA, Sallen Law assists clients with estate planning matters throughout the Philadelphia Main Line area including but not limited to Lower Merion Township, Montgomery County, Bucks County, Delaware County, and Chester County. Attorney Sallen is also licensed to practice in the state of NJ and serves Burlington County, Gloucester County, Camden County.