Death is not an issue anyone likes to discuss. But death, especially our own death, is in the thoughts of many as this pandemic continues and as the death toll continues to climb to truly frightening levels. I can assure you that for single parents, the worry over who will take care of their children is intense.

Do you have clients who are High-Net-Worth/Ultra-High-Net-Worth (HNW/UHNW), single, and have children under the age of 18? If so, you need to consult with them as soon as you can and ask these parents if they died, what plans have they set up for their children’s care?

I don’t underestimate the difficulty of beginning this discussion, but as a professional, you can and should ask this question even if it makes your clients uncomfortable. Although you don’t need to get all this information in one meeting, there is much you need to learn.

 What documents, including a will and a trust, have been drawn up? Where are the originals? If the originals can’t be found, the documents won’t be valid. If these are in a safe deposit box, where is the key? The guardian or trustee will have the authority to have the box “drilled,” as is said in banking, so it can be opened if the key cannot be found.

How many of your clients are single mothers? How many of your clients are single fathers? How old are the children? What are their names and dates of birth? Who will have decision making power over the assets? Who will be the designated guardian to care for and raise their children? What is the contact information for each one of these people?

A critical question you must ask is how much life insurance does your client have? Do they any? Unfortunately, “…half of the single parents with children under age 18 don’t have life insurance.” This is not something you can allow single mothers or fathers to overlook. [1]

If your client owns their own business, such as a professional practice, which will have to be sold, this will take time. The guardian of their children will need immediate liquidity to provide financially for the children.

UHNW individuals should also consider this course of action. Term life insurance is relatively inexpensive, even in large face amounts, and liquidity is needed when a person dies. Just as important, the proceeds of a policy after the death of the insured are not subject to income taxes.

As the mother of a child (who is now an adult), I can tell you that for mothers of young children, the thought of what will become of their children should they die has become an urgent concern.

Some may comfort themselves that it won’t happen to them; it will happen to someone else. Yet, “an estimated 3.5% of children under age 18 (approximately 2.5 million) in the United States have experienced the death of a parent.” [2]      

A single parent must absolutely have specific plans in place for their children’s care should they die.  This is far too serious an issue to ignore. You have a moral obligation to your clients to bring up the subject and learn what plans they have made for the care of their children in the event of their death.

While you need to have this discussion with all of your clients who have minor children begin with single parents. In our professional careers, my colleagues and I have seen the wreckage that accumulates when a single parent with children dies without leaving any instructions about who will care for their children and manage their assets on their behalf. It creates emotional turmoil, administrative turmoil, and lots of attorneys have to get involved.

Please, ensure your single parents with children avoid this.

 

Resources: 

[1] https://insurancenewsnet.com/innarticle/they-arent-buying-it-single-parents-and-life-insurance

[2] Haine RA, Ayers TS, Sandler IN, Wolchik SA. Evidence-Based Practices for Parentally Bereaved Children and Their Families. Prof Psychol Res Pr. 2008 Apr;39(2):113-121. doi: 10.1037/0735-7028.39.2.113. PMID: 20585468; PMCID: PMC2888143.

 

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Contributing Writer: Subject Matter Expert Charles McCain