Estate Planning for Single Parents

Estate planning is never fun, but it can be even more daunting when you are a single parent and almost certainly have a tremendous amount on your plate. Regardless of how busy you may be, it is critically important to take the time to plan out what would become of your assets and, most importantly, your children should you die unexpectedly before they are old enough to care for themselves.

In most states, when a parent becomes incapacitated or passes away, the spouse automatically inherits the rights to make any decisions regarding the children. However, for single parents who are widowed or divorced, it becomes much more difficult to determine who should handle the decision making regarding your children and your estate if things are not clearly outlined in a will. Similarly, if you are in a domestic partnership and raising your children with someone you are not married to, it is important to remember that your assets won’t automatically transfer to that person the way they would if you were married.

Here are some of the most basic things single parents should consider when it comes to estate planning:

  • If your children are minors, the first thing you should do in your will is name a guardian for them. If no guardian is named in your will, if you passed away, the courts would decide where your children would end up.
  • If you don’t already have life insurance, you should get it as soon as possible. If you already have life insurance, it is important to make sure that your coverage would leave enough money to cover any expenses of your estate as well as both the daily and long-term needs of your children. One way to do this is to house your insurance policy within an irrevocable trust, which would separate it from your estate taxes.
  • Review the beneficiaries that you have named in any savings vehicles, such as a 401(k) or IRA, and make sure that your children are named as the beneficiaries.
  • Make sure your children’s health insurance won’t end with your death. It if will, consider options for insuring them after you are gone.

Since each person’s situation is unique, and since you likely have very specific long-term goals for your children’s financial security, it would be wise to sit down with a financial advisor to discuss all the issues you should be thinking about and the best ways to handle your situation. It is important to make sure that whomever you name as a guardian for your children should be made aware of your wishes and any steps you have taken to secure your children’s future.

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