October is National Estate Planning Awareness Month. For parents, and especially for single moms, thinking about estate planning can be a very emotional task. We don’t want to think about the fact that we will one day die or that we may experience a significant medical emergency in our lives and be unable to take care of our children and affairs or make decisions for our family. Even though it is tough to think about, death is inevitable. We must protect and provide for our children when that day does come. The only way to ensure that we are prepared is to plan now.
The main questions our estate plan should answer are:
- Who will take care of my children?
- How will my children be provided for financially and otherwise?
- How will my personal assets and debts be taken care of and distributed?
- Who will make medical and financial decisions if I am unable to make them?
The first step in estate planning is to take some time and really consider the questions above. Write out your answers to these questions. Make note of the areas that you are unsure about. What answers do you know for sure? Where are you stuck? Be honest with yourself during this part of the process as this exercise is only for you to personally take stock of where you are and what you need to do.
Once you’ve answered the questions above and discovered what areas you are unsure about, make a list of those areas. Then, do some research! Read articles about estate planning, talk to the people close to you about your questions, and/or find free estate planning workshops and resources in your area. Doing these things will help you fill in the holes and become clear about what you want.
Once you’re clear on your answers to the four questions above, it’s time to put it all into your estate plan. Your estate plan will consist of key legal documents that spell out exactly what your instructions and wishes are for you, your children, and your estate. This may seem like a daunting process, but because you have already spent the time answering those four important questions above, you’ve done the hard part! Now, you simply have to plug everything into the correct place.
Now, let’s take a look at the important legal documents and processes that you will need to complete to ensure that your estate plans are legally enforceable:
- Take Care of Your Personal Assets, Debts, & Property
The first step is to take inventory. This will likely be the most time-intensive part of the estate planning process. No matter how much or how little you think you own, it is important to designate a plan for each item. To do this, start with the big items: homes, cars, land, or valuable items of furniture, jewelry, art, or heirlooms. Create a list of these items and include their value and their location. Include the instructions for accessing these items (passwords, codes, location of keys, etc.). Pull together any documents that are associated with these items. Deeds, titles, bills of sales, receipts, and associated insurance or warranty policies are all essential items that you will need to gather.
Next, you will also need to create a list like the one detailed above that lists your bank accounts, retirement accounts, insurance policies, savings bonds, and any other financial policies and accounts that you may have. Be sure to included associated online account access information including usernames and passwords, and gather all of the associated policy documents and statements.
Lastly, you will need to create a list of your debts. Include your mortgages, credit cards, loans, lines of credit, and any other debt. As with the other lists, include the location of the items, instructions for accessing accounts, and the associated statements and financial and loan documents. Be sure to note if any of these or any other items are on an auto-pay system with your bank, and provide the auto-pay details.
You should also gather other important documents such as marriage & divorce certificates, child custody documents, and tax returns for the past three years.
Once you have completed these lists and gathered the associated documents, store in a safe and secure place like a safe or safety deposit box.
Be sure to discuss with your estate planning professional who you want to access these items and how they should be accessed. It is crucial that someone you trust is able to access these documents in order to fully carry out your estate planning wishes and assure your affairs are in order after your death.
- Communicate Your Wishes for Medical & Financial Decisions.
The most important legal documents that you will need to complete to communicate your wishes for who will handle your medical and financial decisions and how these wishes should be carried out are a will, a power of attorney, and advance directives. Completing these documents does require the expertise of an attorney or estate planning professional. Do your research to find professionals in your area that fit within your budget. You may even be able to find free (pro bono) or low-cost assistance through your local American Bar Association. If you have health insurance or other benefits through your employer, a discounted rate for legal and/or estate planning assistance may also be included in your benefits policy. Check with your human resources department to determine if this is available.
- Plan for your children’s financial future.
If you do not currently have a life insurance policy, purchase one for you and your children. Check with your employer to determine if there are any policies offered as a part of your employee benefits package. You may be able to increase coverage and/or add your children to these policies at a reasonable cost.
In choosing a beneficiary for your insurance policies and IRAs, make sure that you discuss the best options with your estate planning professional. You want to make sure that your beneficiary is able to access your benefits in a timely fashion. You also want to make sure that your benefits will be designated to care for your children or in the way that you have planned for them to be used.
If you have any savings accounts or college savings plans (i.e. 529 Plans) for your children, you will also need to properly designate a successor owner for these accounts (someone other than your children who will be able to access these account if you die). Your estate planning professional can help you in making the best choice to ensure these funds are able to be accessed and used according to your wishes.
- Plan for your children’s care.
Finally, and perhaps most importantly, you must choose a guardian for your children. Because you have already made the decision about who you want to care for your children, you’ve already done the hardest part! Now, you will need to ensure the guardian(s) that you choose are legally recognized and that you wishes are legally enforceable. It is wise to also designate someone as a backup guardian. This allows you to plan for the care of your children if something were to happen to the guardian you originally designated.
It is important for single moms to take special care in ensuring that their wishes regarding the care of their children are legally and correctly documented. In many cases, custody of minor children will be granted to the closest living biological relative (father, grandparents, etc.). If you have specific instructions regarding who should and should not be granted custody of your children, it is crucial that you protect your wishes by going through the proper legal avenues to designate guardianship. Although the specific legal process can vary depending on the laws in your area, your estate planning professional can guide you through this process.
The Life of a Single Mom is a global nonprofit committed to seeing no single mom walk alone. Having served more than 50,000 single mothers each year, the goal of the organization is establish support groups for single mothers in communities around the world. To date, we have worked with more than 1,500 churches & community groups to start or improve a single mom’s group. Our programs focus on empowering single moms to grow spiritually, emotionally, physically, financially, and parentally. For more information, visit www.thelifeofasinglemom.com.