Becoming a parent means more than just dealing with day-to-day responsibilities. It also means ensuring that your children are provided for in the event you are no longer able to care for them.
For single parents, such planning can feel even more pressing. Being a single parent typically means you alone must take the steps necessary to ensure that your children will be protected no matter what happens to you.
Importance of estate planning for the single parent
While you might be fit and in perfect health today, there's no way to predict the future. Estate planning is an important means of protecting your children's long-term well-being.
Regardless of your circumstances, your estate planning documents should ensure someone will be able to take charge if anything happens to you. While a single parent might be on their own for a number of reasons, such as divorce or death, attorney Eido Walny of Walny Legal Group notes that "the common thread in all of these situations, however, is the physical and financial well-being of the child or children involved."
Estate planning documents for the single parent
The following legal documents are important in creating a comprehensive estate plan that focuses on keeping your children safe.
1. Durable power of attorney. Also known as a financial power of attorney, a durable power of attorney authorizes another person, called your agent, to manage your financial affairs if you become unable to do so yourself.
For Walny, this document is invaluable for every single parent. "A well-drafted durable power of attorney covers everything from paying bills to collecting money to managing online accounts," he says. "The document is effective during life, so if the single parent is not able to manage their finances because they are incapacitated or simply unavailable, this document can help. Where there isn't a second parent to step in, the benefits of a durable power of attorney can be immeasurable."
Somita Basu, of Norton Basu LLP, agrees that the durable power of attorney is an essential document for single parents. "With a durable power of attorney, you name a trusted person to pay bills, make bank deposits, collect benefits, and handle other money matters on your behalf," she notes. "Without this important document, your loved ones will have to go to court to get a conservatorship to manage your financial affairs."
One key aspect of establishing a durable power of attorney is determining who to appoint as your agent. Basu advises that your agent should be someone you trust, who is honest, has common sense and is dependable. She also recommends choosing a backup agent in case the person you've chosen is unavailable or unable to step in as your agent when the time comes.
2. Advanced health care directive or health care power of attorney. Whether you opt for an advanced health care directive (also known as a living will), a health care power of attorney, or both, it's important to have at least one such document for situations in which you're incapacitated and in need of emergency medical care.
What's the difference between the two documents? With an advanced health care directive, you state your end-of-life care and treatment preferences in the event that you become incapacitated and unable to voice these preferences.
"A valid advanced health care directive makes sure that your wishes for medical treatment are followed and relieves the burden on your loved ones from having to decipher what medical attention you would want in catastrophic situations," Basu says. "By thinking and planning in advance, you can help to avoid conflict, regrets, and unnecessary expenses during a medical emergency. It's a difficult subject to think about, but both you and your loved ones will be grateful that you did, should the need ever arise."
A healthcare power of attorney, on the other hand, appoints someone you trust to make important medical decisions for you if you become incapacitated and can no longer make those decisions on your own. While each state may have different requirements for a healthcare power of attorney, Walny notes that the document generally deals with end-of-life medical decisions and is an important document for everyone, particularly single parents.
"Medical providers will not arbitrate these issues for various family members or interested persons," he says. "Doing a health care power of attorney will allow the parent an opportunity to not only decide who will make important health decisions for them when they are no longer able to do so, but will also give that nominated person the guidance they need to make good decisions with a clear conscience."
3. HIPAA authorization or waiver. The Health Insurance Portability and Accountability Act (HIPAA) prohibits the disclosure of patients' private medical information to anyone other than the patients themselves. This means your loved ones would be unable to obtain important medical information about your situation if you're ever incapacitated and unable to deal with the information on your own.
"In a single-parent situation, the dissemination of this information can be critical, both for the health of the parent, but also for the resulting ancillary care of the child or children involved when something happens to the parent," Walny says. "With this document, the parent would name a short list of people authorized to receive information. There is no agency created, so the people named cannot make decisions for the parent, but they can get access to critically important information."
Even though your advanced health care directive or health care power of attorney will likely include wording permitting the disclosure of your medical information, it's still a good idea to have a standalone HIPAA authorization or waiver. "It's not uncommon for medical facilities to refuse access to medical information without a standalone HIPAA waiver," Basu notes. "Make sure you have a standalone HIPAA waiver to allow your nominated agents and family members to have access to your medical information so they can speak freely with your health care providers in case of a medical emergency."
4. Will. A will is essential for the single parent because it not only dictates how your assets will be distributed in the event of your death but it can be used to nominate someone as your children's guardian.
"Remember that the court places a strong weight on your choice for a guardian of your children," Basu says. "However, keep in mind that, if you share custody with a co-parent, the court will likely consider the other parent a suitable choice for a guardian of your children when you are gone (assuming no violence or criminal issues involving the co-parent)."
What should you do then, if you feel that your ex is not the ideal person to look after your children when you're gone? Walny notes that if there's a reason why you don't want to nominate your child's other parent as guardian, you have the opportunity to state so in your will, in addition to setting out who you feel would be an appropriate guardian. He also suggests you name one individual, rather than a couple, to be the guardian. You don't want your children to be involved in a situation in which their guardians are going through a marital breakdown.
5. Living trust. Another useful estate planning document for the single parent is the living trust, also known as the revocable trust. "In its most basic form, a revocable living trust is just a legal contract that you make with yourself to create an entity to hold your assets," Basu says. "A revocable living trust can be set up so you can change it any time in your life (that's why they are called 'revocable'), and it can outlive you, manage your assets, and make sure that your family and friends get what you want them to have when you want them to have it."
Setting up a revocable living trust has a number of benefits. "While the trust generally cannot [address] issues of guardianship, it can do everything else that a will can do, and often does it better, faster and cheaper," Walny says. "Aside from the inherent benefits of a revocable trust, including probate avoidance, privacy, and other benefits, the most important benefit for a single parent is that it makes the establishment of trusts for minors private and outside of the probate forum." He notes that trusts set up within a revocable trust instrument avoid most of the problems of testamentary trusts (that is, trusts that are set up within a will), which can often make the living trust a better way of structuring trusts for children.
Estate planning is an important tool for single parents wishing to protect their families in the event anything happens to them. Having a set of well-drafted and properly executed legal documents to provide for your children's future care will give you peace of mind that can be truly invaluable.
Find out more about Estate Planning Basics