10 Estate Planning Ideas for Single Moms
10 Estate Planning Ideas for Single moms
By Kenneth A. Vercammen, Esq
There may come a time when a parent is unable, due to physical or mental incapacity, to take care of her minor children. If a parent dies, the minor children will need a guardian. In these circumstances, those caring for the children, as well as the courts will need direction. By writing and executing a Will, which includes instructions on guardianship one may select someone, either individually or jointly, with the legal authority to act for minor children and assume control over the assets of the children. Estate planning, which includes the execution of a Will, is just as important for moms with minor children as they are for senior citizens.
Where there’s No Will …
If you do not write a Will, the State has already written one for you. Your assets go to whoever a state law says receives the assets, or to the government itself! A Will should be a statement to the things you truly care about: your children, your parents, your friends, your Church and charities. You can consider remembering your church or school.
As average Americans, we work 80,000 hours in a lifetime, or 45 to 55 years. In spite of all our resources and the assets we earn during our lifetime, the vast majority of Americans do not take the time to create the legal instructions to guide the court or a guardian upon their death. National statistics indicate that more than 50% of Americans die without leaving a will. In the absence of a will or other legal arrangement to distribute property at death, the State must step in to administer the estate and decide who gets custody of your children and handles your money. This process is called the law of intestacy. The result can be lengthy delays in the distribution of your estate, court battles between relatives and your children being raised by someone you do not favor. Without a Will, your family will have to pay substantial costs for accountants, attorneys, bonding companies and probate fees.
If You Have No Will:
If you leave no Will or your Will is declared invalid because it was improperly prepared or is not admissible to probate:
1. People you dislike or people who dislike and ignore you may get some of your assets.
2. State law determines who gets assets, not you
3. Additional expenses will be incurred and extra work will be required to qualify an administrator-Surety Bond, additional costs and legal fees
4. You Lose the opportunity to try to reduce Estate Tax, State inheritance taxes and Federal estate taxes
5. A Judge determines who gets custody of children. A greedy brother or crazy mother in law could ask the court for custody.
6. It probably will cause fights and lawsuits within your family
7. The procedure to distribute assets becomes more complicated
8. The father of your children may try to control the assets of your children and not properly spend the money
In planning, make sure your assets go to your loved ones or favorite charity, not an ex. Therefore, you may wish to do the following:
1) Have an Elder Law attorney prepare a Will to distribute your assets to the people you care about the most. If you already have a Will, prepare a new Will and have the old Will revoked. (Your estate planning attorney will explain this to you.)
2) Prepare a Power of Attorney to select someone to handle your finances if you become disabled. Have your old power of attorney revoked.
3) Select the correct beneficiary on assets you may own, such as stocks, bank accounts, IRA, and other financial assets.
4) Change your beneficiary under your own life insurance, whether whole life insurance or term insurance.
5) Contact your employers human resources and change the beneficiary on life insurance, pension, stock options or other employee benefits. Note that if you are not yet divorced, your spouse may have to sign a written waiver permitting you to change beneficiaries.
6) If you are not divorced or separated from the father, keep your personal papers at a location where an ex-spouse or the childs parent cant destroy them.
7) If you have minor children, nominate someone under a Will to serve as guardian to the children. Although the surviving parent obviously has first right of custody of children, they may not even want custody.
8) Make sure the trustee for any funds designated for your children is the right trustee.
9) Have your attorney prepare a prenuptial agreement, if you decide to get married, so your children can inherit your assets. ) If you get married, have a formal prenuptial agreement prepared by an attorney so your children, not new spouse, receives your assets if you pass away.
10) In New Jersey, if you are still married and living with a spouse, under certain instances the surviving spouse has a right to elect against the will. The disinherited spouse may like to elect against the Will and try to obtain one third of the estate. Your attorney can explain how you can protect yourself and your children.
ESTATE PLANNING TO PROTECT YOUR CHILDREN
Most individuals appoint the parent to act as Guardian of the person and property of their minor children. It is suggested that your Will include a clause which provides that in the event the father predeceases you, or is unsuitable or ceases to act as Guardian of the person and property of your minor children, you appoint a trusted family member or close friend to act as successor Guardian of the person and property of your minor children.
Select a trusted person, a close relative or friends, who will invest and hold your childrens money. In your Will you can instruct the Trustee to apply amounts of income and principal as they, in their sole discretion, deem proper for the health, maintenance, education, welfare, or support of your children or other minors. Direct that the trustee shall accumulate any income not needed for the above purposes, paying and transferring the portion held in trust to the beneficiary upon his or her attaining the age of majority or whichever age you select.
Children born after you sign the Will
Many people direct that the provisions of their Will also applies to afterborn children. Accordingly, if you have any additional children subsequent to the execution of this Will, then wherever you have designated only your named children, you intend that all of your children shall share equally in the relevant provisions of your Will.
In addition to having a formal Last Will and Testament individuals are encouraged to have a Power of Attorney and also Living Will. Moreover, we also recommend they plan ahead and write messages to their family and anticipated executor detailing their specific desires regarding funeral and burial. Written instructions to your family and executor containing information and guidance will minimize uncertainty, confusion, and possible oversights following your death.
While the preceding article contains possible items to be discussed with your family, attorney and executor, the article is by no means exhaustive. A number of these items may not be applicable in your situation, and probably there are many others that are applicable. The essential element is to spend some time now considering what you should tell those most closely associated with you to facilitate their handling of your affairs upon your death.