Loew Law Group discusses five estate planning tips to help single parents.

Five Estate-Planning Tips for Single Parents

Estate planning is important for everyone, but especially for single parents. Single parents face several estate planning issues that other individuals may not face. Protecting their children is usually the highest priority for single parents. A California estate-planning attorney can help single parents ensure their children have everything they need, even if the parent is no longer able to care for their child.

Five Estate Planning Tips for Single Parents

1.  A Single Parent Must Have A Will, and Generally A Trust As Well

A will is one of the most important estate planning documents for single parents. With a will, a single parent can name a guardian for their child after their death. This step becomes even more important if the child’s other parent is deceased, unfit, or unable to care for the child should the single parent pass away.  A trust is often essential for several reasons: (1) the trust beneficiaries won’t need to wait many months for a probate court proceeding to be completed; (2) to ensure that a trustee is in place to manage the assets immediately if the parent dies or is incapacitated while the children are still young; and (3) to enable the trustee to hold the children’s assets in trust for their health, education, maintenance and support until they become adults, instead of distributing the assets to them right away upon the parent’s death.

2.  Life Insurance

Single parents may want to invest in additional life insurance coverage to ensure their children have sufficient financial support after their death. An estate planning attorney can work with a single parent to develop a plan that can avoid tax burdens while protecting the life insurance proceeds for the use and benefit of their children for many years after their death.

3.  Incapacitation Planning

Single parents must also develop a plan should they become incapacitated. Incapacitation planning might include naming someone to make financial decisions and health care decisions should the single parent be unable to do so for any reason. A Durable Power of Attorney allows an agent to pay bills and pay bills for the children from the parent’s financial accounts. An estate planning lawyer can also discuss steps a single parent can take to ensure their child is cared for if they are unable to do so for any reason. A well-drafted trust instrument can also address many of these financial issues, if the parent becomes incapacitated.

4.   Beneficiary Designations

Some assets pass directly to beneficiaries instead of going through probate, such as life insurance, pensions, most retirement accounts, and some financial accounts. Because a minor child cannot receive these assets until they are of legal age, single parents need to work with an estate planning lawyer to determine how to protect these assets for their children. Using various trusts might be the best option for protecting the assets while ensuring the assets are available to support the children if necessary.

5.  Business Succession Planning

Single parents who are business owners need to engage in business succession planning as part of their estate plan. Business succession planning can ensure that a small business continues to operate after the single parent’s death for the benefit of the children. The business can continue to provide income for the children and be preserved for the children to inherit when they become of legal age to receive their inheritance. 

Business succession planning can also provide an efficient process for closing and liquidating the company after the single parent’s death. Depending on the circumstances, closing and liquidating the business might be in the best interest of the children. 

Contact a California Estate-Planning Attorney for More Information 

Estate planning for single parents can seem overwhelming. However, a California estate-planning attorney can make the process less stressful. Contact us today for a consultation. Our attorneys can guide you through the estate planning process and provide suggestions for how to accomplish your goals and desires for protecting your children in the event of your death or incapacitation.