Helpful Estate Planning Tips for Single Parents
Consider Creating a Last Will and Testament (Will)
A will is one of the most crucial estate planning documents for single parents. A will allows a single parent to choose the guardian of their child after their death. This legal document also outlines the child’s inheritance, financial support, and living arrangements if they are under 18 years of age. Without a will, your child could end up with relatives that you had never even met. It is important to note that if your child has another living parent, in most cases they will have the legal right to full custody of your child. Consider talking with an estate planning attorney experienced with those who’ve recently divorced, who can help you better understand your legal rights as a single parent, and ensure they remain protected.
Consider Creating a Trust
A trust will not allow you to choose a guardian for your child, however, it will allow the beneficiaries of your estate immediate access to your assets, which can help your child if they are still young. Trusts do not go through the probate process, which allows a trusted adult to immediately provide financial support for a single parent’s children. Additionally, a trust enables a trustee to safeguard a single parent’s assets for their child’s health, education and general needs until they become adults.
Consider Planning for Incapacitation
Large costs may arise if a single parent becomes disabled, injured, ill, or incapacitated in any way. If a single parent is unable to care for his or her children due to illness or injury, he or she must create a strategy in the event of incapacity. A comprehensive estate plan for a single parent should include incapacity planning, which would name a person to make important health care and financial decisions in the event of a serious accident, injury, or illness. Some of the important documents that can be included when planning for incapacity are a Durable Power of Attorney, a Durable Power of Attorney for Health Care, a Living Will, and a HIPAA Authorization or Waiver.
Durable Power of Attorney
Including a Durable Power of Attorney within an estate plan can allow a designated agent to pay bills for the children from the single parent’s financial accounts. Also known as Financial Power of Attorney, this document allows someone to manage your assets and financial affairs if a single parent remains unable to do so due to any form of incapacity.
Durable Power of Attorney for Health Care
A Durable Power of Attorney for Health Care allows someone to make decisions related to a single parent’s health care. These decisions include life support, hospice care, organ donation and burial. Consider carefully who you want to choose as your agent, as they will have the responsibility to make important health care decisions on your behalf.
Health Care Proxy or Living Will
Some states use a Health Care Proxy or Living Will rather than a Durable Power of Attorney for Health Care. This Health Care Proxy is very similar to the Durable Power of Attorney for Health Care, but this document must be updated if there are any changes made in a single parent’s medical plan due to family dynamics after estate planning is completed. A living will provides instructions to medical professionals regarding your end-of-life plans. While every state has its own form, the basic format allows a single parent to indicate what kind of care they would want if they cannot communicate, and what kinds of treatments or interventions (such as CPR) they do not want.
HIPAA Authorization or Waiver
The Health Insurance Portability and Accountability Act (HIPAA) forbids the sharing of patients’ private medical information with anyone other than those affected by it. If a single parent is ever incapacitated and unable to make important health decisions on their own, other loved ones may not be able to access important medical data about your condition. For a single parent, the dissemination of this information may be vital for both the parent’s health and the child or children’s ancillary aftercare. This HIPAA authorization or waiver allows a single parent to create a list of people that are authorized to obtain information regarding protected health care information in order to make appropriate decisions.
Consider Business Succession Planning
Business succession planning is an important component of many estate plans for single parents who are business owners. Business succession planning can ensure that a small business continues to operate after the death of its owner, ensuring the children’s well-being in the process. When they are old enough to receive their inheritance, the company may continue to provide money for them or transition the business to them. Additionally, business succession planning can also liquidate or close a business after the death of a single parent.
Consider Life Insurance
Single parents may wish to purchase additional life insurance coverage to ensure that their children are properly cared for in the event of their death. An estate planning lawyer can assist a single parent in creating a strategy that would minimize taxes while also safeguarding the life insurance money for several years after their death and using it for their children’s benefit.
Consider Visiting with an Estate Planning Attorney
If you are a single parent, it is important to understand the benefits of having an estate plan. An estate planning attorney can help you avoid confusion about what happens to your children, property, and finances in the event of your death. Furthermore, an estate planning lawyer can also represent you if any disputes arise with family members over property left behind. While no single parent wants to think about their own death, it is a very important issue that should not be overlooked. If you are a single parent, it is essential to have a comprehensive estate plan in place. Consider visiting with an experienced estate planning attorney to ensure your health and financial expectations are followed, and your children are cared for according to your wishes.
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