Did you know that the United States has the highest rate of children living in single parent households? According to the Pew Research Center, nearly a quarter (23%) of U.S. children under the age of 18 live with one parent. If your household falls into this category, ensure that your estate plan properly accounts for your children.
In many respects, estate planning for single parents is similar to estate planning for families with two parents. But when only one parent is involved, certain aspects of an estate plan demand special attention.
If you’re a single parent, here are four questions you should ask:
1. Are my will and other estate planning documents up-to-date? If you haven’t reviewed your estate plan recently, now is the time to do so to ensure it reflects your current circumstances. The last thing you want is for a probate court and intestacy laws to decide your children’s future.
2. Have I selected an appropriate guardian? If the other parent is unavailable to take custody of your children should you become suddenly incapacitated or die, does your estate plan designate a suitable, willing guardian to care for them? Will the guardian need financial assistance to raise your kids and provide for their education? You will want to address these matters in your will and trust planning.
3. Am I adequately insured? With only one income to depend on, plan carefully to ensure that you can provide for your retirement as well as your children’s financial security. Life insurance can be an effective way to augment your estate. You should also consider disability insurance. Often, single parents don’t have a “backup” income in the event they can no longer work.
4. What happens if I remarry? Will you need to provide for your new spouse as well as your children? How will you divide your resources to provide for your new spouse? What if you have already placed your life insurance policy in an irrevocable trust for your kids to avoid estate taxes on the proceeds? Complications can arise if you and your new spouse have children together or if your spouse has children from a previous marriage.
If you are a single parent, it’s critical to review and, if necessary, revise your plan. We’d be glad to answer any questions you may have: Russ Russell, Debby Spain, Caty Richardson, and Sarah Johnston.