Estate planning is important for everyone, but it can be an especially urgent task for single parents.
Why?
Without a second legal guardian designation in place, single parents cannot effectively “guarantee” (to the extent that anything can be guaranteed) that their children will be protected and provided for if something happens to them. A well-prepared estate plan not only distributes assets but also addresses guardianship, financial management and healthcare decisions that can be truly consequential if single parents become gravely ill, get seriously injured or pass away.
Making this effort
One of the most important steps for a single parent is naming a guardian for minor children. If you’re a single parent of dependent children, you need to understand that without this in place, a court will decide who raises your children if you pass away or are incapacitated, and it may not be the person you would have chosen. By naming a guardian in your estate plan, you can take control of this consequential decision and provide your child with greater security and stability.
Beyond guardianship, it’s also important to plan for how your child’s financial needs will be met in the event that you can no longer care for them. A will or financial power of attorney designation alone may not be enough. Many single parents benefit from setting up a trust. A trust allows you to designate how and when your assets will be used for your child’s benefit. For example, you can specify that funds be used for education, medical care or living expenses, and you can stagger distributions to prevent a young adult from receiving a large inheritance all at once.
Single parenthood can be deeply rewarding, but it is undeniably stressful. By planning ahead, you can minimize a very important fraction of this particular kind of stress.