The importance of guardianship and estate planning for single mothers
For single mothers, particularly those navigating complex relationships with the other parent, planning for their child's future is not just advisable - it's essential.
Creating a will stands out as one of the most critical steps in this process. Not only does it grant mothers the power to make legally binding decisions concerning their child’s future, it allows them to specify exactly who will care for them and how any inheritance should be managed.
Senior Legal Adviser at Sanlam Trust, David Thomson, recently explained guardianship procedures for single mothers so they can safeguard the well-being of their children.
Choose your child’s guardian wisely
The selection of a guardian is perhaps the most significant decision a single mother can make. This individual will assume the responsibility of caring for the child in the event of the mother’s passing.
"It should be someone you trust completely, someone who will make the best decisions for your child’s future," Thomson emphasises.
The chosen guardian will have the dual responsibility of overseeing not only the child's education but also their healthcare and overall welfare.
With such critical obligations, mothers must select someone who not only aligns with their values but who will consistently act in the child's best interest.
Consider setting up a trust for financial security
Thomson also advocates for the establishment of a trust to manage a child’s inheritance, an essential tool for ensuring that financial resources are utilised responsibly and not squandered by others.
There are various types of trusts that mothers can consider:
Testamentary Trust: Designed to activate upon the mother’s death, this trust allows designated trustees to manage the assets left to the child, safeguarding the inheritance against misuse.
Inter Vivos Trust: Created while the mother is alive, this trust provides more flexibility and control over assets and can arrange for ongoing financial support while also shielding the inheritance from creditors.
Umbrella Trust: This is a more economical option, this trust ensures that life insurance payouts are professionally managed until the child reaches adulthood, making it a practical solution that also circumvents the lengthy estate administration process.
Each trust style serves a similar core purpose: ensuring the child’s inheritance is judiciously administered and prioritised.
Nominate beneficiaries carefully
When nominating beneficiaries within a will or life insurance policies, it’s important to remember that if the child is a minor, the guardian will oversee these funds until the child is of age.
In cases where there is concern about the other parent's capacity to manage the inheritance, the assets can be placed in a trust.
This approach guarantees that the funds are overseen by trustees mandated to act in the child’s best interests.
Understanding the essence of guardianship
A guardian bears full responsibility for the child, while a godparent only bears symbolic responsibility.
Thomson explains, “Being a guardian means stepping into the shoes of the parents,” reinforcing the gravity of this role that demands emotional support alongside financial responsibility.
Trusteeship versus guardianship
While a guardian nurtures a child’s overall well-being, a trustee focuses on managing financial assets. An ideal situation would be for mothers to appoint both roles, possibly involving a trusted family member as well as a professional.
This division ensures responsible and effective administration of the estate.
Without a will, a child's inheritance could wind up in the government's Master's Guardian Fund, forcing a lengthy court process to appoint caregivers.
As a result, the child may not be provided with the flexible support they may require and the process may become confusing.
The role of the surviving parent
Under the Children’s Act, the surviving parent is usually appointed as the guardian unless deemed unfit.
If a mother believes that the other parent is incapable of providing adequate care or managing the inheritance, legal recourse is available to challenge guardianship through the High Court.
Thomson cautions that the courts always prioritise the child’s best interests, adding that a co-guardian can be designated to step in should the surviving parent be unable to fulfil their duties.
In sum, for single mothers committed to safeguarding their child's future, understanding and navigating the guardianship and estate planning process is indispensable.
By making informed choices regarding guardianship, trusts, and beneficiary nominations, mothers can establish a robust foundation for their children's well-being and financial security.