Monthly Update for Administration of Trusts and Asset Management

ESTATE PLANNING STRATEGIES FOR A

SINGLE PARENT

Your responsibilities as a single parent make your estate planning needs distinctly different from those of a married couple.  With no surviving spouse to provide for, your planning should concentrate on protecting your child’s (or children’s) welfare and on minimizing potential estate taxes.  These objectives require strategic solutions that are custom-fitted to your circumstances.

A GUARDIAN PLUS A TRUST

If your child is still a minor, your primary need is to arrange for a guardian.  If you do not name a guardian and you pass away while your child is a minor, the court may choose a guardian who would be unacceptable to you.  That possibility is easily prevented by specifying in your Last Will and Testament who is to have custody of your child (children).  In addition, inside your Last Will and Testament, you can establish a trust that assures protection for your minor child’s financial interests.  With a trust, you are able to control the age and conditions under which your child can receive distributions.  You can also ensure the trustee will provide or obtain professional asset management.  You may also utilize the trust to provide for any specific needs or special needs for your child (children).

MANAGING LIFE INSURANCE PROCEEDS

If you own life insurance to replace all or part of your income, you can have the life insurance proceeds paid to your trustee, to be managed and administered with the rest of the trust assets.  Using the trust to

hold the insurance proceeds will let you designate how and when your child will receive the insurance proceeds. 

You can remove life insurance proceeds from your taxable estate by setting up an irrevocable life insurance trust during your lifetime and transferring full ownership of your policy to the trust.  There are some other requirements for this strategy to work correctly.  Please contact us or one of your trusted advisors to discuss further.

ASSET PROTECTION

By use of a trust you can also protect your adult children’s inheritance from their potential creditors, predators, bankruptcy and divorce.

DISABILITY PLANNING

Your estate plan should also provide for the possibility of your permanent or temporary disability.  You need a reliable party to make financial and health care decisions if you become unable to make them for yourself.  Your attorney can discuss the options available.  One strategy is to give a relative, friend, or other trusted person a durable power of attorney to make decisions concerning your health care, and a different trusted person or a professional a durable power of attorney to conduct financial transactions on your behalf.  This can avoid court supervision if you become unable to manage your affairs for any reason.   

REDUCING YOUR TAXABLE ESTATE

Though the federal gift and estate tax exemption amount is a generous amount at $13,610,000, it is scheduled to expire at the end of

2025, so don’t overlook estate-tax planning.  As a single person, your options for reducing the size of your taxable estate do not include the marital deduction. Giving a series of gifts to your adult child or children remains an easy and practical strategy, especially if you transfer assets that are likely to appreciate in value.  You can make annual tax-free gifts up to $18,000 per recipient this year, either outright or in trust.  Over time, annual gifting can have a substantial and positive effect on your estate tax liability.

CONCLUSION

If you need help updating your current estate plan, we can help.  Our experienced professionals can suggesteffective strategies for achieving your planning goals.  Please contact us if you would like to discuss.

WealthTrust Oklahoma is the Oklahoma Trust representative office of National Advisors Trust Company. We are independent and hold a federal charter.  In addition to trust administration services, we offer investment management services through our firm, WTO Advisors.                     

Alyssa Kaiser, CTFA, has over 31 years of experience in the trust, investment, and banking industries and is President of WealthTrust Oklahoma and WTO Advisors.  Alyssa may be contacted at: (405) 241-1600, or by