“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! 

The post Estate planning for single parents appeared first on Newcastle Financial Planners & Financial Advisors.

We all know the importance of protection for adults, but if child cover doesn’t feature in the protection mix, you could be left exposed to financial consequences if your child suffers illness or injury.

When putting a protection plan in place, the main focus is naturally to insure against events impacting their own health. But in the case of parents with dependent children, a plan which doesn’t address the financial consequences of a serious child illness is incomplete.

Parents with children who suffer severe illness or trauma not only deal with enormous emotional strain but also are likely to suffer severe financial stress. They face unexpected indirect costs of treatment, recovery, time off work – all of which are not covered by Medicare or health funds.

Imagine this…

A professional couple in their late thirties with two young children are committed to their careers and earn good salaries. They have two cars, and a 4 bedroom house in an affluent suburb.

They have a solid protection portfolio in place, the top income protection contract, term insurance with a solid sum insured, own occupation TPD cover and the best trauma insurance available.
If anything happens to either of them, they are covered.

But what if something terrible happened, to one of their children?

The fact is that children can suffer serious traumatic illnesses and accidents. In these circumstances, as parents, we would want to do everything in our power to help them, including being there for them.

The financial implications

Stopping work for months or even years to care for a seriously ill child can have devastating emotional consequences.

Additionally, there is likely to be substantial out-of-pocket costs associated with treatment, travel costs and medicines.

The late thirties and forties are the ages when people are generally at their most exposed financially. ABS figures1 show that for couples with children under 5, over 93% have household debt, and that for the same people, the average amount of debt is 2.5 times their annual household income. In both cases these figures represent the highest level of indebtedness of any life stage.

Hence, having appropriate life insurance coverage is important.Yet the majority of risk recommendations don’t include cover for this type of scenario.

Why child cover is a must. Consider the statistics…

A recent report from the Australian Institute of Health and Welfare (AIHW)2 revealed that in 2009, an estimated 7 per cent of Australian children had a disability and of these, over half had profound or severe core activity limitations (4 per cent). Compared with other children, those with a severe disability rely more heavily on parents and siblings. In fact, in the period 2009-10, over 57,600 children aged 0-14 used National Disability Association services (majority in their own home).

And did you know that on average, an Australian child under the age of 14 is diagnosed with blood cancer every 36 hours? The average length of treatment time for boys is two years and for girls it is three years3.

So with the possibility that any parent may need to take time off to support a sick child, why do we tend to overlook this type of cover? It is, after all, widely available and is far from expensive, with $100,000 cover in most cases only costing around $10 per month.

For more information on child cover, contact our Financial Planners today. Remember to 'Like' Leenane Templeton Chartered Accountants on Facebook, Twitter and Google +.

1 ABS Australian Social Trends 4102.0, 2009 http://abs.gov.au/AUSSTATS/abs@.nsf/okup/4102.0Main+Features60March%202009
2 AIHW Report ‘A picture of Australia’s Children 2012’
3 Leukaemia Foundation (2011) ‘Fact Sheet: blood cancers in children’, Leukaemia Foundation, Australia
Source: Zurich, August 2013

The post Child cover: The missing piece in many risk portfolios appeared first on Newcastle Financial Planners & Financial Advisors.