Financially Protecting Your Child in a Parenting Partnership

Co-parenting families are unique in many ways.  From an Estate Planning point of view, the most significant difference is the lack of a marital relationship to secure basic protections.  So how can you make sure that you, your co-parent and your child are adequately protected?

First, get on the same page with your co-parent about how best to protect one another.  Some parents want to provide direct monetary relief to their co-parent should something happen to them.  Others want to leave their money in trust for the child or children.  Whichever you choose, make sure that your co-parent is aware of your wishes and that he or she has the information they need to act if you were to become disabled or die.

Second, draft an estate plan that creates the type of protection strategy that you want.  You may wish to include your co-parent in your Will as a beneficiary.  If not, you may want them to serve as a Trustee for money that you leave your child in Trust.  Leaving money in trust for your child allows you to control the distribution of that money, i.e. when they receive the principal amount, and also who controls the investing and distribution of the money.  Naming the other co-parent as a trustee makes sense for many, but it is not necessary.  If you do not leave your money in trust, it will be distributed either through your estate according you your Last Will and Testament, making the executor of the estate the manager of any money left to a child, or by designation, as in a life insurance policy or other designated beneficiary account.

Finally, keep your estate plan up to date.  What makes sense now may not make sense in ten years.  If you put money into a trust, make it a revocable trust so that you can easily change the terms of the trust or abolish it altogether.  Make sure that your estate plan includes medical power of attorney designations and living will instructions.  Once you have an effective estate plan in place, you can rest assured that your family will be protected if you can’t be around to protect them.