Single Parent? How To Protect Your Children With Estate Plans
No one wants to imagine that they could pass away and leave their children alone. However, making estate plans to deal with that possibility can be compared to having health insurance even though you are perfectly healthy. Read on and find out what, as a single parent, you should do to ensure your children under the age of 18 are cared for after you are gone.
Guardianships
A last will and testament presents a parent with a way of setting up a guardianship plan. This plan should name a person, including a backup person, who you want to take care of your children if you pass away. Another component of the guardianship issue is funding for the guardianship. You should set up a separate provision to address the money side of things. For instance, you might set up a fund to be used for certain needs until the child graduates from college or turns 23 or so.
Trusts
When it comes to the financial aspects of your estate, a trust can allow you to be a lot more detailed with your wishes. You may be understandably wary of bestowing a large sum of money on a young person. They may be too immature to manage the funds properly, could be taken advantage of by others, and you might want to specify exactly how the funds are to be used.
For instance, you might want some of the money you leave behind to be used for education purposes. A trust allows you to leave money under the care of a trustee who is responsible for distributing funds in the manner you prescribe. You can state how much, when, and for what purpose money is to be distributed to your children. Choose your trustee with care, however, because they will oversee the funds until your child reaches a certain age.
Life Insurance
While it's possible to leave your minor child money using a life insurance policy, consider carefully what it could mean for your child. While you might wish for them to use the money for certain purposes, like the down payment on a home, for instance, you cannot specify your wishes with a life insurance policy. Also, others put in charge of things like the guardian and the trustee would not have any say in how the insurance money is used by your child.
Speak to an estate planning attorney for ideas on using life insurance policies, trusts, and guardianships to protect and care for your children if you should pass away.
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