Estate Planning: Keeping Your Kid's Future on Track

The bad news: If you're not prepared, the courts can appoint an unlikely guardian for your child if you die. Their assets could be frozen and their inheritance managed by a court-ordered administrator who gets paid from your child's estate. Worse, other family members could become involved such as an estranged father or his family. (Read new wife.)

Married or single, male or female, most Americans avoid estate planning like the plague.

But here's some good news about preparing for your children's future in the event of your death. You are only going to die once, so why not deal with the paperwork now and enjoy living? Follow this easy-to-swallow formula of what you need to do to assure that your children are protected. It's really not as complicated as you think. It just takes some serious thought to some important questions and then implementing a plan of action.

  • FIRST, BUY LIFE INSURANCE.
    Single mothers know that this may be their only way to rep]ace lost income in the event of death but most are still grossly underinsured. The average value of an individual life insurance policy purchased by a woman last year ($100,000) was way less than half the size of the value of the average policy purchased by men ($250,000.) A good rule of thumb? Experts suggest purchasing a policy that has a value of about 7 to 8 times that of your salary, (although some urge clients to buy 10 times.) For example, if you earn between $23,000 and 24,000, a policy that pays $150,000 would be okay. But if you earn more, say between $28,000 and $32,000 a year, you'll want a policy that pays $250,000 in benefits.
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