In 1984, Congress issued a resolution, signed by President Reagan, establishing March 21st as National Single Parent Day: a day devoted to recognizing the dedication of single parents, who make self-sacrificial efforts to care for their children’s needs, and encouraging family members, friends, and communities to help provide an optimal environment for their children. As a single parent, you should feel proud of your efforts to nurture and care for your children. Here are a few additional things you can do to provide for your children’s future that you may not have considered.
Name a guardian. If your children’s other parent is willing and able to care for them if you become incapacitated or pass away unexpectedly, he or she will likely be given physical custody of the children and responsibility for their care. In the case of single parents, however, the other parent often may not be able or willing to take on this role. This is why it is crucial for you to name a guardian who will step into your shoes to provide day-to-day care for your children if something happens to you. If you do not name a person you trust, a court will step in to appoint someone. Because the person the court chooses to be your children’s guardian may not be the person you would have chosen, it is vitally important that you designate this person in advance. You can name a guardian in your will. Although the court will still have to appoint the guardian, the court will typically defer to your wishes.
In making your decision, there are a few factors to keep in mind: Does your chosen guardian share your values and parenting style? Will your chosen guardian require your children to relocate? Does your chosen guardian have the energy and stamina needed to care for your children? Do they have the time to be an involved caregiver? Do you want more than one guardian to care for multiple children, or do you prefer for the children to stay together? It is important to weigh the importance of these considerations in making your decision.
Create a custodial account. If your children are minors, you can establish a custodial account to hold an inheritance under a law called the Uniform Transfer to Minors Act. If you do not appoint the custodian, the court will appoint someone to control and manage your children’s inheritance until they reach the specified age. (A custodian will manage the funds in the account for the benefit of your children, until they reach a specified age, which can be as old as 25.) At that point, they can spend the money as they wish, which may not be optimal for a young person who is not yet mature enough to make prudent financial decisions. In addition, any present or future creditors could try to reach your children’s inheritance to satisfy their claims.
Create a trust. A trust is often preferred over a custodial account because it is more flexible and can be designed to protect the funds against your children’s future creditors and their own imprudent spending. You can name someone who is adept at handling money to manage and disburse the funds for their benefit. This can be the same person who will act as the children’s guardian, or a different person if you do not trust the guardian (e.g., an ex-spouse) to handle the money you have left to your children.
If you would like to set up a trust that can be used to manage your money and property for your (and your children’s) benefit if you become too ill to do it yourself, you can establish a revocable living trust with yourself as the initial trustee. This type of trust will remain in effect if you become incapacitated or pass away. The successor trustee you have named can continue to manage the funds and make distributions for the benefit of your children. The successor trustee can also step in to manage and distribute the funds for your benefit if you are unable to do so.
The trust terms can specify the purposes for which the trust funds can be used and how and when the trustee should make distributions. You can choose the type of distributions you believe are best for your children: Some parents give the trustee the discretion to make distributions for specific purposes, such as the children’s health, maintenance, education, or support, or even for a down payment on a house or to provide funding for the child to start up a business. Others give the trustee complete discretion in making distributions for the benefit of the children. The timing of distributions, which can be designed to meet your particular goals, can also be spelled out in the trust.
If you have more than one child, you can specify whether the distributions should be in equal amounts or if a greater percentage of the money in the trust should be distributed for the benefit of certain children. E.g., children with special needs may warrant a disproportionate share. In addition, you can address specific issues that may be of concern. For example, you can indicate whether you would like a home you own to be sold, or if you prefer for the children’s guardian to move into the home so they will not have to relocate. If your home is not sold, the terms of the trust can also indicate who will be responsible for paying the real estate taxes, utility bills, and maintenance expenses. The home is a particularly complex issue to consider, as there are often emotional ties and memories connected to it, as well as ongoing costs, and frequently, a mortgage. As experienced estate planning attorneys, we can help you think through the best course of action for your family.
Consider writing down your wishes regarding grandparents’ visitation. If you have named someone other than a grandparent (your parent) to be your children’s guardian, it is important to specify in your estate planning documents whether you wish the grandparents to be able to visit with your children.
While you are living, it is your right to determine whether–and how often– your children will see your parents (their grandparents). However, when you pass away, grandparents may have a right to see your children. The Virginia law on grandparent visitation rights gives primary consideration to the welfare of the child. But your written wishes will carry great weight.
Call Us Today
As a single parent, you can gain substantial peace of mind by creating an estate plan that ensures that your children will be properly cared for—both physically, emotionally, and financially—in the unlikely event that something happens to you while they are still too young to take care of themselves. Please call our office today to schedule a consultation.
Content provided by Wealthcounsel; Edited by M. Eldridge Blanton, III, Esq.