Earlier this month, we discussed how estate planning is not on the agenda of many single parents due to the hectic pace of everyday life, which is typically consumed by trips between work and school, errands and even the occasional crisis.
We also discussed how this could prove to be a real mistake given the stakes involved and the importance of creating a comprehensive estate plan consisting of a few vital instruments.
In today’s post, we’ll conclude this discussion, examining revocable living trusts and a power of attorney, two instruments considered indispensable by most legal experts.
A revocable living trust
Many single parents might believe that a revocable living trust is something reserved for wealthy families looking to protect their considerable fortunes. This is simply not true, as a revocable living trust can be incredibly beneficial for people from all walks of life, especially single parents.
That’s because it enables you to retain control of your assets while you’re alive and also appoint a trustee to manage them in the event of your death. This is particularly important for single parents, as you can appoint someone you really trust to manage the trust assets and make responsible distributions to your beneficiaries (i.e., your children).
For example, the trustee can ensure that your 17-year-old child doesn’t suddenly inherit several hundred thousand dollars all at once, but rather manage this money and make distributions over time for things like an education or a car to get to work.
As if all this wasn’t encouraging enough, a trust can also keep your affairs private, and avoid the sometimes lengthy and expensive probate process altogether.
Power of attorney
What makes a power of attorney so valuable to you, the single parent, is that it enables the appointment of a trusted agent to make financial and legal decisions on your behalf in the event of your incapacity. After all, if you were to experience a sudden medical event, who would ensure that your kids are continuing to be looked after and your rent is paid?
Whether you are single, divorced or married with children, consider speaking with an experienced legal professional to learn more about all of your estate planning options.
Source: The Huffington Post, “Estate planning and the single parent,” Alexandra Smyser, Jan. 16, 2015