It is crucial for single parents to protect their children through estate planning. Ohio law wasn’t written with the twenty-first century in mind. Therefore, single parents must be proactive to ensure that their desires are met. However, parents can provide the protections they desire for their children with proper estate planning.
Assembling Core Documents
The core documents for single parents mirror those for married couples and adults without children. These documents include:
- The parent’s will,
- Financial power of attorney,
- Healthcare power of attorney,
- Living will, and
- HIPPA forms
A will instructs probate court who gets your property when you pass away. Financial powers of attorney permit individuals to act on your behalf regarding your financial affairs. Likewise, healthcare powers of attorney give others authority to make medical decisions on your behalf. Your living will provides directives to doctors when you are permanently incapacitated or terminally ill. Meanwhile, standalone HIPAA forms cut red tape when loved ones desire to obtain medical information for you.
Estate planning lawyers can draft estate plans specifically contoured for the challenges facing single parents. Documents specifically drafted for single parents protect children in ways that standard form documents cannot. This includes situations involving alternate caretakers, decisions involving medical care, and financial affair management.
Naming Alternate Guardians
Perhaps the most crucial decision parents make when creating an estate plan involves naming alternate guardians of minor children. Single parents often must factor multiple issues when making decisions concerning guardians. Without taking the time to consider these issues, decisions made by parents may result in unintended consequences.
Death of One Parent
In many situations, the death of one parent will lead the other parent to assume custody of the child. If the other parent is deceased, unwilling, or unfit to assume the role of guardian for a child, then estate planning documents must reflect this. This may conflict with the wishes of the other parent.
In Ohio, most divorced spouses enter into shared parenting agreements. In these cases, parents share jointly the decision-making process involving their children. Most of these cases result in parents agreeing that they will assume the role of legal guardian if the other spouse passes. If no shared parenting agreement exists, then only one parent holds custody.
Even when only one parent holds custody, courts generally will appoint the other parent as legal guardian after the custodian’s death. However, this is not always the case. Some parents may not be in a position to care for their children, may refuse, or be unable to provide the level of care needed. In these circumstances, estate plans are crucial and naming alternate guardians.
We all have relatives that look good on paper but may not hold the sort of values we look for when it comes to parenting. Instead of leaving the decision entirely up to a judge whom you’ve never met, naming alternate guardians in your will provides the court with evidence of your desires as a parent. This can provide peace of mind and help ensure that the caretakers for your children share the values that you hold deeply.
Choosing Executors for Single Parents
Single or re-married parents must seriously contemplate whom they name in their will as executors. Executors, as the name suggests, execute the terms of wills through probate court. This includes paying bills for the estate, dividing property, and accounting for all assets. Often, married couples name each other and then dependable adult children as executors. However, being unmarried, or married with children from a prior married, complicates this decision. Depending on family dynamics, parents may want to discuss and seriously contemplate the naming of executors in their wills.
Updating Beneficiary Forms
When spouses divorce, retirement, investment, and insurance policies often treat the other spouse as predeceased. This means that absent any planning, a high likelihood exists that the policies transfer into the probate estate. This results in a higher cost of the probate process.
Naming your minor children as sole beneficiaries creates other potential issues for your family. In addition to the fact that adults must act on behalf of minors when handling financial affairs, the idea of leaving sums of money to young adults may cause concern. Estate planning techniques involving trusts protect not only when the children are under the age of eighteen, but also can ensure prudent management during young adulthood.
Few things compare to a child’s bond with his or her pet. Oftentimes, including information about family pets provides additional peace of mind for parents. If something were to happen to you, creating an estate plan that tethers guardianship to the gifting of the family pets provides some solace that the children will have a consistent companion with them. Ensuring that all members of your family receive the protection and companionship they deserve makes a great estate plan even stronger.
Contemplating UTMA Accounts
A minor child’s guardianship and assets sometimes require checks and balances. The person raising the child may not act in a financially prudent manner. As a result, an estate plan may appoint someone else to handle a minor’s financial affairs. Estate plans incorporate this by establishing a Uniform Transfer to Minors Account or UTMA. An UTMA account names a custodian of funds for a minor child. These accounts can control assets in them even after the child turns eighteen years old in some circumstances. An individual may establish an UTMA account and name someone other than the actual legal guardian as the custodian. This creates a check on the financial affairs of the custodian by balancing it with someone financially prudent.
Trusts for Single Parents
Concerns about future legal guardians, whether former spouses or otherwise, may lead to the decision of establishing a trust. A trust appoints an individual or entity to care for assets that benefit someone else. For example, parents may create trusts for their children in order to ensure they act as sole beneficiaries to assets. The trustee has a fiduciary duty to ensure that all actions are taken to the best interest of the fiduciaries. This means trustees are not beholden to legal guardians. In fact, they ensure trust assets go directly towards the benefit of the child and not the legal guardian’s standard of living.
Trusts protect children once they become adults. They help limit the amount, purposes, and frequency of the withdrawal of assets. This ensures the money lasts longer in the event the child lacks financial maturity. Additionally, trusts create a level of protection against future creditors of minors if drafted in a careful manner.
The advantages of creating trusts stretch beyond simple planning in the event of unexpected death. They provide numerous advantages depending on situations involving all of the family members. Even if a child does not need alternate guardians, they can provide benefits well into adulthood that save money if managed correctly.
Secondary Marriages for Single Parents
Ohio probate law barely contemplates the 1950’s Leave It To Beaver-style family, let alone the complexities facing the 21st-century family. Even if you have a will, a probate court may create results you did not intend to happen. Regardless of the length of marriage, spouses, including second marriages, have a right to take elections against your estate and the will you drafted. In order for courts to truly ensure your desires when it comes to gifting your assets, you need to take steps today to protect your family. This can include trust planning and beneficiary management to lower your probate estate and title assets in a way that transfer outside of probate court.
Taking the time now to plan your estate helps diffuse potential conflicts down the road between family members. Disputes between spouses and children from previous marriages can become ugly, cost money, and leave everyone with hurt feelings. Through planning, the process can turn away from this and towards a collaborative approach that honors your legacy.
529 and Other Savings Plans
In addition to the management of estate plans, creating savings plans with your children as beneficiaries helps protect them and ensure the protection of their interests. One way for this is by creating a 529 Plan that allows investments to grow tax-free for qualified expenses related to education. As with any account involving a minor, choosing the proper custodian remains an important part of its creation.
Planning for Single Parent Families
A divorce does not have to disrupt the planning and care for your children. However, without taking the time to plan, it can create results that are less-than-ideal. Creating an estate plan that properly considers the intricacies of a single parent helps ensure that your desires are met and your family is protected in just about any situation.