“There are only two lasting bequests we can hope to give our children. One of those is roots, the other, wings.’’
~ Johann Wolfgang von Goethe, German aurthor and statesman (1749-1832).
Question: I’m a single parent, what special considerations do I need to make for my underage children as I update my estate plan?
Answer: Documenting your future wishes is especially important if you’re the single parent of underage children. No matter if they’re adults or minors, established and on their own, or under your care and dependents, the full scope of planning for their future plays a central role in estate planning decisions and often is overlooked. That’s why it’s crucial for you to include your thoughts and perspective on how you would like those relationships to be incorporated in your future plans.
This is especially true for single parents of underage children. It’s awful to imagine, but do try to carefully consider what your child’s life would look like if something were to happen to you. Would they live with a relative or ex-spouse? Would they have to leave their school and community? What kind of limitations might there be when accessing their inheritance?
A trust document with a named trustee can be designed to formally address your children in your estate plan. Should you pass away, the trust can accept funds from your estate, retirement plan, IRA and insurance settlement, as well as from any claim, judgment or settlement that may result from the cause of your death. Also, having a trust in place gives any court a legitimate basis to determine your wishes and expectations for your child, including who you wish to carry out those wishes and who should remain an advocate and influence in your child’s life.
Although not all terms in a trust are enforceable, they can allow you to formalize your wishes and establish details about who you intend to care for your children and how the trust’s funds can be used. Together with your CERTIFIED FINANCIAL PLANNER™ practitioner and estate planning attorney, you can create a document that addresses a variety of these fundamental concerns. Here are several questions to think through as you tackle this important issue:
Who would you like to serve as your child’s guardian, and who could take over that role as an alternate if needed? Will that guardian also provide afterschool care, prepare meals, take your child to school and purchase their essentials?
How and when should the trust’s funds be used? Are they intended for specific costs, like schooling and healthcare, or will they provide general financial support?
How much money does your trust need to meet its intended purpose? What level of discretion should your child be given in spending that money?
Would your child be receiving any monthly income, such as Social Security? Who would be the payee?
Who has authorized visitation rights to spend time with your child? Who can have extended visits with them and take them on vacation?
Who do you envision helping your child make major decisions, such as those regarding school, their health, extracurricular activities and even dating and driving?
Parenting and caregiving are amazing privileges. As in so many areas of life, with opportunities coincide with responsibilities. One of those duties is to have a plan in place for the future of your children in the event something catastrophic were to happen to you. There’s no better gift to yourself and your children than taking control of what you do have control over, and that is creating a plan for the “what ifs.” Stay focused and plan accordingly.
Please note, changes in tax laws or regulations may occur at any time and could substantially impact your situation. While familiar with the tax provisions of the issues presented herein, Raymond James financial advisors are not qualified to render advice on tax or legal matters. You should discuss any tax or legal matters with the appropriate professional.
Information contained in this report was received from sources believed to be reliable, but accuracy is not guaranteed. All investments contain risk, including loss of principal. Views are as of August 5, 2019 and subject to change based on market conditions and other factors.
Certified Financial Planner Board of Standards Inc. owns the certification marks CFP®, CERTIFIED FINANCIAL PLANNER™, CFP® (with plaque design) and CFP® (with flame design) in the U.S., which it awards to individuals who successfully complete CFP Board’s initial and ongoing certification requirements.
This article provided by Darcie Guerin, CFP®, Vice President, Investments & Branch Manager of Raymond James & Associates, Inc. Member New York Stock Exchange/SIPC 606 Bald Eagle Dr. Suite 401, Marco Island, FL 34145. She may be reached at 239-389-1041, email firstname.lastname@example.org. Website: www.raymondjames.com/Darcie.