Being a single parent can be hard — but your situation is not unusual. According to Pew Research Center, approximately one-third of the children in the United States live with an unmarried parent — and it’s natural to worry about what could happen if that parent dies.
Making a trust part of your estate plans may be a good idea. Trusts can be drafted in numerous ways, ranging from ones that eventually give the child free reign over their choices when they become an adult to ones that are structured toward educational goals and other important expenses. Before you can begin to narrow down your options, however, you need to know the answers to the following questions:
- Who do you want to raise your child if you suddenly die or become incapacitated? Is that person willing and able to do so? You don’t want to make plans until you’ve checked out the situation.
- Do you want the same person to control the child’s trust? (It may be wiser to consider a second party to avoid conflicts of interest and ensure proper oversight.)
- What sources of funds will go into the trust upon your death? Do you have adequate insurance to meet your child’s needs? Do you have any real property that would need to be sold to further fund the trust?
- Will your child’s monthly financial needs be met when they are a minor through Social Security payments or some other type of regular payment? If so, what should the trust be used for, instead?
- At what point, if ever, do you want your child to have control over the money in the trust? Do you wish to limit how the money can be spent (and your child’s options) or do you ultimately want your child to have more freedom?
None of these are the kinds of questions that can be answered on the fly, so consider all of your options carefully and have a plan — and questions — ready when you head to the attorney’s office to discuss a trust for your child.