There are several estate planning items that are particular to single persons that married persons do not always have to contend with. Specifically, those people that are unmarried have a slew of items to think through that a married person does not. Most married people, for example name their spouse as the person to take care of them if they get sick, or administer their estate if they die.
Unfortunately, single persons do not get this advantage. Instead, they have to come up with an alternative plan as to who is to take care of them in case of a specified life process.
This gets even more difficult if children are involved. When children are involved, a single person really has to spend time thinking through who takes care of the children. It could be the ex-spouse or biological parent. But it could just as easily be the grandparent or someone else that is trusted.
Below is a great article on some estate planning issues for single persons.
10 Estate Planning Steps for Single Parents
1. Make a list of assets and debts and decide how you want to distribute your property. See estate planning worksheet.
2. Choose a child guardian and property guardian. See letter to child guardian.
3. Meet with an attorney to discuss estate planning forms such as a will, trust, power of attorney, and advance directives.
4. Meet with a financial planner regarding beneficiary designations on IRAs, 401Ks, college savings plans, UTMAs, annuities, and life insurance policies.
5. Buy life insurance or increase death benefits under existing policies if necessary.
6. Make a last will. See wills and trusts.
7. Establish and fund a living trust or another type of trust if recommended by your attorney.
8. Set up a pet trust if you have pets.
9. Execute a durable power of attorney for finances.
10. Make a living will and health care power of attorney.
Estate Planning Concerns for Single Parents
1. As a single parent, you must make estate planning a high priority. If your children do not have a second parent to rely on for their care and financial support, it is even more critical you take steps to provide for them in the event of your death or incapacity.
2. If you die without a will that names a guardian for your minor children, a court will appoint a guardian and may grant custody of your children to someone you don’t want. See guardianship.
3. In the event of your death, your child’s biological father or mother, or your ex-spouse, may be granted custody. If you are concerned about this, consult an attorney to discuss your options. See finding an attorney.
4. Minor children are not allowed to take ownership of assets beyond a minimal amount. If you fail to make informed estate planning decisions when naming beneficiaries of life insurance, bank accounts, retirement accounts, etc., a court will appoint a guardian of the estate to oversee property inherited by your children. Going to court to get property released or expenditures approved when a court appointed guardian is involved requires an attorney and is expensive. By executing the right estate planning documents, you can avoid this and ensure money left to your children is used for their benefit.
5. If you become disabled or incapacitated, the lives of your children will be severely affected if you have not signed a durable financial power of attorney. If you are unable to communicate, pay your bills, and manage your other finances, your family or friends would have to go to court to obtain a conservatorship, unless you have legally appointed someone to serve as your agent in a financial power of attorney. See financial decisions.
Estate Planning Guide for Moms
If you are a Mom and want to make sure your children are protected if something happens to you, get a copy of The Mom’s Guide to Wills and Estate Planning (Mom’s Guide to Wills & Estate Planning). It covers all the essential issues for parents, such as naming a guardian, making a will, deciding whether you need a living trust, naming beneficiaries on retirement accounts, buying life insurance, how to set up pay on death accounts, and appointing an agent to manage your financial affairs if you become incapacitated. If you have known for awhile that you need to make an estate plan, this guide offers the inspiration you need to get it done.
The Mom’s Guide to Wills and Estate Planning includes several estate planning worksheets, including an inheritance planner. Written in a clear, easy to read style, this guide is one of the best selling estate planning books written specifically for mothers.
Making a Living Trust
By establishing a living trust for your minor children, your assets in the trust will avoid probate and immediately be transferred to your trustee, allowing them to be used for the support and care of your children rather than being tied up in a lengthy probate proceeding. Living trusts also allow you to define how you want trust property used, such as for your child’s education, medical treatment, travel, living expenses, clothing, etc. A living trust allows a trustee appointed by you to manage the property until your children reach the age they are to receive property as specified in the trust.
Single Parents with Large or Complex Estates. The estate planning tips for single parents featured in this article do not include certain estate planning strategies that should be considered by wealthy individuals or parents with complicated estates. If you have a sizeable net worth and your estate may be subject to estate taxes, consult a tax advisor and an estate planning attorney.
This is not an exhaustive list of the types of trusts and other estate planning devices that may be appropriate for single parents. To learn all your estate planning options, meet with a lawyer. See parent’s estate plan.
Make Sure Children Are Not Separated From Pets
After the loss of a parent, a child relies on all that is familiar. This includes family members, friends, teachers, and pets. If your child is attached to your family pets, you may want to ensure your pets will still be in his or her life after you are gone. Since many people feel as close to pets as other family members, being separated from a pet after the loss of a parent can traumatize your child. For steps you can take, see pet owners estate plan.