When you are a single parent you must take action to put an estate plan in place. There is absolutely no way that you can responsibly go through life without making provisions for the well-being of your children if you were to pass away.
This is true regardless of your age. Of course we all expect to watch our children become adults in their own right, but there are no guarantees. Individuals pass away in accidents and due to sudden catastrophic health conditions each and every day. As sad as it may be many of them have minor children, and some of them are single-parents.
Our trust attorneys can provide you with the guidance you need. In this post, we will take a look at four things that every single parent should consider.
If you are a single parent you should include your choice of guardian for your children when you are planning your estate. In the event of your passing the state would be forced to decide on the fate of your children if you do not assert your own wishes in a legally binding manner.
How would your children get by financially if you were no longer here to care for them? It is important to make sure that you have made provisions for the well-being of your children from a financial perspective. Trust attorneys would recommend the purchase of life insurance to serve as an income replacement vehicle.
As a single parent you should make sure that you have the appropriate incapacity planning documents in place. One of these legal devices is call a living will. This type will has nothing to do with financial assets; in a living will, you state your issues with regard to the use of life-support systems if you are ever in a terminal condition with no hope of recovery.
Durable powers of attorney will also be part of a well-constructed incapacity plan. With a durable power of attorney for health care, you need someone to make medical decisions on your behalf the event of your agitation. You can have durable financial power of attorney to empower an agent to handle your financial decision-making if you become able to manage her own affairs.
Will or Trust
An asset transfer vehicle sometimes also be part of an estate plan for a single parents. Many people assume that a last will is the right choice, and it could suffice, but there are some major drawbacks. One of them is the fact that it will must be admitted to probate. This is a legal process that can be costly and time-consuming. You lengthy like the nature of probate can be a problem, because the heirs cannot receive their inheritances while the court is probating the estate.
There is another pitfall that goes along with the utilization of the last will. The people that are named in the document will receive direct, lump sum inheritances after the probate process has run its course. If you are not sure about the money management capabilities of people on your inheritance list, this can be a source of concern.
Another option would be a revocable living trust. When this type of trust is in place, the probate court is not involved, and this is a major benefit.
If you were to decide to use a revocable living trust rather than a last will to facilitate the transfer of your assets after your passing you would find that there are three primary participants.
The creator of the trust is of course one of them, and this individual is known as the grantor or settlor of the trust. When the grantor is creating the trust he or she must name the other principals, and one of these is the beneficiary who will be receiving monetary distributions out of the trust.
There must be someone in place to administer the assets in the trust, and this individual or entity is going to be the trustee. While you can name anyone that you would like to many people will choose to utilize a professional fiduciary entity such as a trust company to administer the funds. You not necessarily have to empower the trustee to distribute assets on one lump sum, and this is another positive.
This is a very basic overview of how a simple revocable living trust is structured. If you are interested in the possibility of creating such a trust for the well-being of your loved ones you are invariably going to have some detailed questions. The trust attorneys at our firm would be glad to answer them, and you can set up a consultation if you give us a call at 586-493-7661. There is also a contact form on this website you can use to reach out electronically.