“Isn’t estate planning all about looking after the assets of the wealthy when they die? What has estate planning got to do with being a single parent?”
Of course estate planning is about ensuring that there is an orderly transfer of assets between generations for the rich, but every person will leave something behind when they die, so estate planning is for everyone – rich or otherwise. The key aim of any estate plan is to ensure assets are transferred to support the right person(s), at the right time. And this is particularly relevant for single parents with young children.
While the welfare of all children is a concern to parents, young children of single or widowed parents may be in a more vulnerable position for obvious reasons.
It’s not that difficult
Estate protection is not something the average single parent really wants to think about – or usually has time to do so – but there is good news. Making appropriate contingency plans need not be difficult or expensive – and the resulting peace of mind is worth the effort.
For such an important issue, it is best to seek appropriate professional advice. When seeking advice use the following questions as a starting point:
1. Is your will valid as a single parent? Is it appropriately expressed for the benefit of your children and up to date? Often people forget to update their will when personal circumstances change or they have no will at all. The results can be disastrous for your children.
2. Have you nominated an appropriate person(s) under the will to act as a guardian for your children? Is there a back-up option?
3. Who should be nominated as your personal legal representative (executor) of your will? The person selected should be someone who can competently and responsibly carry out your wishes.
4. It may be wise to establish a testamentary trust under your will. That is, a protective trust that comes into existence upon death that provides financial support for your children until they complete their education.
5. Do you have enough life insurance so that the legal representative can clear any mortgage or other debts and provide for the living and education expenses of your children? Are the beneficiaries under your life policies appropriate?
6. Have your children (or perhaps the personal legal representative of your estate if a testamentary trust has been created and estate will be clear of debt) been included in any superannuation death benefit nomination?
7. Do all of your major assets have clear, current and unambiguous title?
8. Should an enduring power of attorney be put in place nominating an appropriate person? This ensures that decisions can be made if you are incapable of looking after your financial affairs.
This list is not exhaustive nor will it be relevant to all situations, particularly where business ownership and other complicating factors come into play. However, it is a handy checklist for when you start talking to your adviser about these important issues.
Our financial planners are at hand to help with any questions you may have in relation to estate planning if you are a single parent.
Call (02) 4926 2300 or email us.
Estate planning for single parents needs to be taken seriously so let us help you!