14 Dec Three Crucial Estate Planning Moves for Single Parents
Being a single parent is quite common in the United States—in fact, the Census Bureau estimates that 23% of U.S. children live in single parent homes. Some people begin the parenthood journey all on their own, while others might have lost a partner to death or divorce. But there’s one thing that all single parents have in common: the need for a sound estate plan.
If you’re a single parent, creating an estate plan is more important than ever. It can help ensure your child’s financial security and wellbeing, just in case anything should happen to you. But with guidance from an estate planning attorney, taking a few strategic steps will help you protect your child’s future.
A Single Parent’s Guide to Estate Planning: Three Crucial Moves to Consider
1: Appoint a Legal Guardian
If you are your child’s sole legal guardian, naming an alternate caregiver is of the utmost importance. You’ll need to prepare a legal will that names a guardian for your child and have the document witnessed appropriately. Your estate planning lawyer can go over it with you to make sure that it’s legally valid.
Without a valid will, the court will be the one to decide who gets the care of your child. They might end up with an unreliable relative or even be placed in foster care. The last thing you want is for your child to have to wonder who will take care of them and where they will live. We go over the details of how to choose a guardian in this post from May.
2: Set Up a Trust Fund
In our opinion, this is a move every parent should make. It’s a great way to secure your child’s financial future, because the funds in a trust are protected from probate. If you set up an irrevocable trust for your child, the funds will even be safe from things like lawsuits and bankruptcy. You can also specify how, when, and in what increments the funds should be distributed.
You can also place assets like your home, your vehicle, your investments, or your business in a trust. If you die suddenly, or you are incapacitated by an accident, ownership will automatically transfer to the trust. Choosing the right person to be your successor trustee or hiring a trust management firm will ensure that your assets are handled properly until your son or daughter comes of age.
3: Set Up Advance Directives
Durable power of attorney gives your personal agent legal access to your finances. Your agent might be the same person you appointed as guardian, or the administrator of your trust fund. That person would be able to pay your bills, collect your benefits, and manage your financial affairs if you are ever unable to or simply unavailable. For instance, they can make transactions on your behalf if you are traveling outside the country.
You might also want to grant a medical power of attorney to someone you trust to make healthcare decisions for you, especially if you have strong opinions about healthcare. That way, if you are ever unconscious or in a coma, your wishes will be honored. As a single parent, it can also be a good idea to give a trusted third party access to your healthcare records. Signing a HIPAA waiver or release form will permit the disclosure of vital information.
Expert Estate Planning Assistance in Arizona
Single parents face many challenges, but estate planning doesn’t have to be one of them. The experts at Phelps LaClair can advise you on exactly what you should include in your estate plan and help you draft the documents. Take the next steps toward securing your child’s future—give us a call today to schedule a free consultation.
Photo by Derek Thomson on Unsplash used with permission under the Creative Commons license for commercial use 12/13/2023.