estate planning

Estate Planning for Single Parents

How to get started making some of the most important decisions a parent can make.

Every estate planning conversation eventually focuses on the children, whether they are still minors or are grown, established and independent.

When I advise families on estate planning, I first work to determine my clients' overall perspective about their children, and what they feel are the children’s capabilities and limitations. Parental expectations and their evaluation of their child’s potential to meet those expectations often determine whether they decide to limit access to funds and how long those limitations should last.

For single parents with a minor child, the stakes are perhaps even higher. When one member of a couple dies, the children generally do not have to leave their home, school and community, but when a single parent dies, a child may leave that entire city to live with a relative or ex-spouse — leaving behind familiar places and friends. Parents may be single for a variety of reasons — some are voluntarily so, while others may have been in a relationship with the other parent that ended through a breakup, divorce or death.

It impresses me when I see single-parent clients who have worked to build a healthy and supportive community for their children that primes them for successful relationships of their own. I often see some or all of these characteristics:

  • The parent is committed to their children, spending large amounts of time with them and participating in or attending their activities.
  • The parent has a supportive and established network of friends or family who share their commitment to their children’s welfare.
  • The parent maintains an open, respectful line of communication with their children.
  • The parent insists that the children respect and demand respect from the educators and influencers in their lives.

After I discuss a client’s children with them and understand their approach to those relationships, the next step is to learn about their support network and find out if there’s anyone who could serve in a formal capacity if needed. Often, the other parent also maintains some form of custody or scheduled visitation rights. One major factor in planning decisions is the client’s relationship with their ex and the way it ended.

Most clients feel that their child’s other parent is the best person to take over full custody in the event of incapacity or death. For other clients, this is an unacceptable situation, which means that their estate plan must be crafted with special care. In addition, they need a supportive network ready to advocate for the child.

The estate plan should include a Trust and a Trustee that will accept funds from the deceased parent’s estate, any retirement plan, IRA and life insurance settlement, and from any claim, judgment or settlement that may be brought relative to the cause of the parent’s death. It is imperative that this Trust be in place so that any court that may be involved has an established basis to determine the deceased parent’s wishes and expectations for the children. The Trust tells the court who the deceased parent intends to carry out his or her wishes and who should continue to be an advocate and influence in the child’s life.

In addition:

  • The Trust may name the child’s intended guardian, including any alternates, in the event that the surviving parent is denied custody or can’t serve for some reason.
  • The Trust should outline in detail how its funds should be used, as well as the level of discretion the child may be given and when, and who should be involved in the child’s life.
  • The Trust should clarify who has authorized visitation rights, including the right to keep the child for extended visits or to go on vacation.
  • The Trust should outline who is allowed to advise or consent on major decisions in the child’s life, regarding schools, doctors, sports and activities, and determine when it’s acceptable for the child to date, drive or travel alone.

Although not all the terms in a Trust are enforceable, they do give the parent a place to formalize their desires. A Trust is the final legal method where a parent can give notice and instructions in his or her place.

Here is an example of some wording that may be found in a Trust. This would be for a parent who wants to give their teenager near-total discretion over their choices:

It is my utmost desire that the Trustee generously apply Trust funds so that Child may engage in reasonably safe, legal and age-appropriate sports and activities as he may choose while encouraging the importance of his education. I direct the Trustee to expend Trust funds to enable Child to attend any accredited university, college or other trade or educational institution, including advanced and independent studies, anywhere in the world, upon such reasonable living arrangements as Child desires, utilizing available financial assistance, and pursue Child’s desired educational or career goals, even if such goals are unlikely to provide a substantial living.

In contrast, here’s an example where a parent intends to influence their teenager’s choices using the Trust funds as an enforcement mechanism:

It is my utmost desire that the Trustee apply or withhold Trust funds, in its sole discretion, so that Child engages only in reasonably safe, legal and age-appropriate sports and activities without hindering Child’s education. I direct the Trustee to expend Trust funds, and apply any selected financial incentives or disincentives necessary, to ensure that Child attends an appropriate domestic accredited university or college, including advanced and independent studies as Child may desire, upon suitable living arrangements, utilizing available financial assistance, and diligently pursues educational or career goals likely to provide a substantial living.

A Trust can be drafted in countless ways, with too many possibilities to cover in this column. However, any single parent should be pondering these basic questions and be able to discuss them when they meet with an estate planning attorney to draft their Trust:

  • Who will be providing your child’s daily, weekly or monthly after-school care or sitting? Who will prepare their meals, transport them to school and activities and shop for them?
  • Who is willing and able to take your child into their house and raise them? Who should have visitation rights? Who should help with decisions related to health care or school?
  • How much money would your Trust ideally contain at your death? Would your Trust’s primary purpose be paying for health care, for education or providing general financial support?
  • Would any Social Security or other monthly income be paid for your child? Who would be the payee?

This kind of planning is never easy. No matter what preparations you make, they will seem inadequate, because you, the parent, are irreplaceable. So, get past that thought and draw up the second-best scenario. Work with an estate planning attorney to create a Trust that will support that outcome. If you don’t put it all down in writing, the persons you will need to speak for you won’t know what to say.

About the Author

Timothy Barrett, Trust Counsel

Senior Vice President, Argent Trust Company

Timothy Barrett is a senior vice president and trust counsel with Argent Trust Company. Timothy is a graduate of the Louis D. Brandeis School of Law, 2016 Bingham Fellow, a board member of the Metro Louisville Estate Planning Council, and is a member of the Louisville, Kentucky and Indiana Bar Associations, and the University of Kentucky Estate Planning Institute Program Planning Committee.

Most Popular

Your Guide to Roth Conversions
Special Report
Tax Breaks

Your Guide to Roth Conversions

A Kiplinger Special Report
February 25, 2021
The 12 Best Tech Stocks to Buy for 2022
tech stocks

The 12 Best Tech Stocks to Buy for 2022

The best tech-sector picks for the year to come include plays on some of the most exciting emergent technologies, as well as several old-guard mega-ca…
January 3, 2022
How to Know When You Can Retire
retirement

How to Know When You Can Retire

You’ve scrimped and saved, but are you really ready to retire? Here are some helpful calculations that could help you decide whether you can actually …
January 5, 2022

Recommended

What Assets Should Be Included in Your Trust?
estate planning

What Assets Should Be Included in Your Trust?

A revocable living trust is a great tool to help your assets pass smoothly to your beneficiaries, and it can significantly reduce the headaches of pr…
January 16, 2022
Uncomfortable Lessons I Have Learned in Estate Planning
estate planning

Uncomfortable Lessons I Have Learned in Estate Planning

A personal story from a financial planner’s own family illustrates the importance of being prepared … and what happens when your parents aren’t.
January 1, 2022
From Facebook to iTunes to Amazon, You Need a Digital Will!
estate planning

From Facebook to iTunes to Amazon, You Need a Digital Will!

Online accounts and digital media are valuable, and they could be misused, locked up or even lost if you don’t take the right steps. Your estate plan …
December 19, 2021
33 States with No Estate Taxes or Inheritance Taxes
retirement

33 States with No Estate Taxes or Inheritance Taxes

Even with the federal exemption from death taxes raised, retirees should pay more attention to estate taxes and inheritance taxes levied by states.
December 13, 2021