Each person requires a different type of estate plan and perhaps also a look at why the person wants or needs an estate plan. The Huffington Post has a short article “Estate Planning and the Single Parent” that provides some ideas to think about when thinking about an estate plan.
Life for a single parent is already busy without thinking about estate planning, but with a little thought and time, an estate plan can create piece of mind if something were to happen to you, particularly if your children are under 18 years of age. In today’s article, I will be looking at some questions that pertain to estate planning for single parents.
Why do I need a will?
A will provides for naming a guardian for minor children. A revocable living trust cannot name a guardian for children (it can create trusts for children). Naming a guardian for minor children is very important because if you do not, a court will decide for you. Particularly if you the only surviving parent, a court may pick a relative you may not want or even someone you do not know. You can even appoint two guardians – one who actually cares for your child and another who will manage the child’s finances. Thus, it is important for a single parent, even if you do not have any “assets” to still have a will in order to avoid a lengthy and costly court proceeding to determine who can care for your child.
You should take a look at all your beneficiary forms that you may have filled out. The types of accounts that require beneficiary forms are retirement accounts (i.e., 401(k)s, Roth IRAs, IRAs, SCEPs) and life insurance. If you are a divorced single parent, you may have selected your ex-spouse as the beneficiary. If you do not make a change, your ex-spouse may receive the account upon your death still. A minor child cannot legally receive money until he or she turns 18, so you may want to name a revocable living trust as a beneficiary and the child as a beneficiary of the revocable living trust instead of naming a child as a beneficiary for the account. However, each situation is different so if you plan to name a minor child as a beneficiary, you should speak to an attorney on how to properly and effectively do so.