Most people presume that a comprehensive estate plan is unnecessary until you are retired and wealthy. It is true that trusts are essential tools to minimize estate taxes, provide for charities, and ensure loved ones are able to benefit from your hard work.
But trusts are more than a tax planning strategy. A comprehensive estate plan accomplishes a variety of goals. This is particularly true of single parents. While estate planning may not be high on the list of priorities for single parents, having an estate plan is as important as any other financial and health planning tool.
Below are four reasons why single parents need an estate plan.
1. You can name guardians for minor children
The first priority for most single parents is ensuring their children will be cared for even if something unforeseen should happen to them. Naming a guardian for minor children is particularly important for single parents, even more so if the other parent has passed away or is incapable of caring for your children. The best individual(s) to care for your children if you can no longer do so may not be the person named under New York state law.
2. You will be able to have your health care wishes respected
In addition to naming a guardian for your children, you can also name a health care proxy who can make medical decisions on your behalf if you are no longer able to do so. An advance health care directive can greatly ease the burden on loved ones, including your children, as you will have indicated how you wish to be cared for, and who should ultimately make the decision about your medical care.
3. You can ensure your children will not receive a (relative) windfall
How much money is too much when you are age 18? For most of us, the answer is relatively little. Even the proceeds from a life insurance policy may be spent unwisely and lead to more harm than good for an 18 year-old. By setting up a trust, you can stagger payments to your children or qualify that the money be used for your children’s benefit, such as by getting an education or buying a home.
4. You can minimize or avoid probate
Probate is the process by which your estate is distributed under court supervision. Some estate planning tools can help you minimize, or even avoid probate altogether, which can reduce the time and expense of distributing your estate.
These are just a few reasons why single parents should have an estate plan. The exact estate plan that is right for you will depend on your individual circumstances and goals, so it is best to speak to an experienced estate planning attorney if you are considering creating an estate plan.