Single Parent, Many Assets: How We Partner with You to Provide Peace of Mind
As a single parent during the pandemic, my mind often wandered to what happens to my teenagers should something happen to me. With whom and where will they live? How and when should they access the family assets? Who will help them now and in the future?
Luckily, I have helped many of our single-parent clients plan for these same concerns and establish their own estate plans, so I was basically prepared. For single parents with significant wealth, an estate plan is essential, although I find that when someone is grappling with significant life changes, such as a divorce, death of a spouse, or a pandemic, updating an estate plan is often overlooked.
To attain peace of mind, you need to have people and entities you know and trust to take care of your children if for any reason you are unable. Often, these roles of “utmost responsibility” can be done by, or with the help of, us here at LNWM working with whomever you appoint as guardian, co-trustee or co-executor of your estate. The result is essentially a partnership between LNWM and the people you trust to provide for your children’s needs and nurture their aspirations.
Here are the key ways we provide peace of mind:
***Power of Attorney – In case you become disabled or incapacitated, LNWM would manage your finances and assets on your behalf through a Power of Attorney, which can take effect immediately or under specific circumstances.
***Financial advisor to you, your children, and the person you designate as guardian for children. Unless you specify otherwise, the court will appoint a guardian for children under the age of 18, if you become disabled, incapacitated or pass away. So it’s best to name a guardian in both your will and your Power of Attorney who knows you and your family well. Because the guardian should focus on your children, you probably don’t want this person burdened with financial and investment concerns. LNWM can continue to manage the family assets and finances working with whomever you appoint as guardian.
***Executor/personal representative for your estate. For additional peace of mind, many of our single-parent clients also name LNWM as executor or personal representative in their wills. This allows us to handle all estate settlement issues that arise, including working with your attorney to manage the probate process and oversee the distribution of assets.
***Trustee or co-trustees for any trusts you have established. Many teens and young adults are responsible with money and will seek out advice if they’re unsure about how to proceed. But would you want to hand them a large inheritance when they become adults legally (age 18 in Washington State)? Most would say no. A trust allows you to specify what goes to whom, when and how. Another benefit: unlike a will, which becomes a public document filed with the court upon death, a trust bypasses probate and remains private.
One good strategy is to transfer ownership of your main assets to a revocable trust coupled with a “pour-over” will. While you’re alive, you control the assets in the trust and can change the terms at any time. Upon death, the pour-over will activates the transfer of all your other main assets to the trust, which would then become irrevocable (permanent) and would make distributions to your children and other beneficiaries as you had specified. LNWM would continue to serve as the corporate trustee to manage the trust assets, but you can also name a co-trustee – a family member or close friend who knows you and your children well — to provide guidance and advice in case questions arise as to your intent.
Coming up with a plan for your children and your assets in case something happens to you is a very personal and important decision that takes a lot of thought, especially for single parents. This does not mean you have to arrive at the decision in isolation. Many single parents talk to their children about a Plan B should they not be around — whom they’d like to live with and where. And many teens and young adults want to know the extent of the family assets and what will go to whom when. The more communication there is, the better the outcome, I find.
As financial advisors, we can facilitate meetings to discuss difficult topics with you and your family. Think about all the things you want to do for your children and whom you think can help them if you’re not there. Then reach out to us to discuss how to make that happen.
For specifics on estate planning documents, please view this webinar by my colleague Kristi Mathisen.