Protecting your kids as a single parent

If you're a single parent and something happens to you, who would make sure your kids are taken care of financially?

A parent passing away young is a situation that no one wants to think about. But it happened to me. My parents divorced when I was 5 years old, and 10 years later, my mother died of pancreatic cancer. She became ill so suddenly that she didn't have time to make many plans. She passed within 3 months of her diagnosis. Within those few months, I went from being a sophomore in my hometown high school, wanting to play on the football team that fall, and not having a care in the world, to learning how hard adult life could be. It was a learning experience—one I wish I didn't have to go through.

My mother had a will and life insurance. A portion of her assets passed into a custodial account that was held for me, and the rest was left to her parents, whom she trusted to take care of me financially. Unfortunately, her parents both died within a few years of her. Even though my mother was named a beneficiary of their wills and some of their assets should have passed to me, I never received that money. Greed can sometimes play into asset transfers at death and a few of my family members took advantage of their position.

Building a family

On my father's side, every generation has a military story. My father served in the Vietnam Era; his father served in the Army Air Force during World War II; my maternal grandfather was a soldier in World War II as well. I didn't think I wanted to go into the military after high school but after a couple of years of college, having been through so much, it was clear that I wasn't ready to be there. I needed more structure and discipline. I decided to do what everyone else in the family had done and enlisted in the Air Force.

I served 4 years on active duty, spending time in Sarajevo and other war-torn areas. I met my wife in the military and shortly after we married, our oldest son was born. My wife and I agreed that we didn't want one of us to be gone all the time. We decided to separate from active duty. I joined the Air National Guard part time, became an officer, and I started my civilian job at Fidelity, still deploying to Iraq and other spots during my tenure.

My wife and I married young, had many happy years together, and raised 2 terrific boys. But 6 years ago, it became clear that it was time for us to go our separate ways. My older son, now 26, was in college at the time and my younger one, now 21, was still in high school. After we separated, I essentially became a single parent—both boys primarily lived with me, and I handled all financial matters relating to the kids.

So 3 decades after I lived through the nightmare of losing my primary caregiver as well as the inheritance that was intended for me, I found myself in the position of being solely responsible for making sure my own children had better protection.

Planning for the unthinkable

When a marriage ends, there's so much to deal with—the mental hurdle, the grief, trying to keep up with your day-to-day responsibilities, and figuring out how to rebuild. But it's very important to gather your financial information and take an inventory of all the assets as soon as possible. Usually, one spouse is much more involved in the finances. Knowing what you have is a key part of strategizing for a division of assets and ensuring protection for any minor children.

In my family, especially because of my job, I was very informed about our finances. As a single parent, I had to set up my estate plan so my sons would receive all my assets as intended—but since they're still in their 20s, not all at once. My boys are named as beneficiaries on all my financial accounts, some outright, some in trust until a certain age. I'm very open about these plans, and they know that as they grow up and start their own families, I may change those provisions in the future. My older son is named as my health care proxy, so he would make health care decisions on my behalf if I wasn't capable. My younger son, who has a good head for finances, is named power of attorney, so he would handle my accounts if I was incapacitated. My will also lists them as executors with succession clauses over time, which allows for changes based on the capacity or age of the primary executor.

I also want to make sure that my sons know exactly where to find everything they might need. I keep a folder right next to my desk that says: “The Estate Plan of Christopher Dodd” with the date it was last updated. I also have electronic copies for them to access if needed as well. Fidelity has an online estate planning tool that can help you gather key information and organize it into an easy-to-use format. I've included that document in my binder for the children.

I've dealt with many clients who avoid dealing with estate planning altogether. I tell them they absolutely need to take care of it right away. Frankly, I can get a little forceful about it. Start by adding beneficiaries to your accounts and creating a will. I learned early on that you can't live forever and that any of us could die tomorrow. Loss is an inevitable part of life but leaving your children or other loved ones without a safety net or direction doesn't have to be.