“If something were to happen to  me, would you raise my child?”

As a single parent, you may have already considered who will care for your child/ren if anything should happen to you. You may have even asked someone to do that job if necessary.

But the trust you place in another person results in an huge financial burden — food, clothing, medical care, hobbies, sports, holidays, even the need for a larger home means costs add up. Where will the money to support your child come from?

Usually we forget that raising a child has a financial cost and could be unrealistically burdensome on the child’s new guardian. While there may be some assets (such as a house) that could be sold to help alleviate the burden its our experience that not only are these things encumbered by mortgages they also need to be sold quickly which means they sell for a bit less. In other words, there isn’t always as much left over as you might (optimistically) think.

The gap between what you get from the sale versus the amount of money needed for your children’s upkeep can be easily (and cheaply) filled with life insurance.

Now its all very well to have the money sorted. A vital piece of your estate plan is your will — a legal document that specifies how your assets will be managed when you die. Verbal statements of intentions are often disregarded in formal legal proceedings and without a written will, the law determines the disbursement of your assets and appoints a guardian for your children. Both of those could be totally different to your real wishes and some absurd results can occur.

Most often, the other parent is the appointed guardian next-in-line, but there are times when this is not the case. The other parent may be deceased for example. If possible, sit down with your child’s other parent and draw up a joint family care plan that designates the agreed upon future guardian and care of the child.

The most important first step is to work with a knowledgeable life insurance and estate planning people to ensure you are considering all scenarios and options to establish the long-term plan that’s best for you. Call us to get started now.

 

About Campbell Hastie

Cam is one half of Auckland based mortgage brokers, The Go 2 Guys.

He makes a living by sharing what he knows about mortgages with people, arranging mortgages for people and then insuring people.

He doesn't claim to know everything about mortgages himself which is why he teamed up with David Mercer — hence the ‘2’ in Go 2 Guys.

He writes posts regularly on his blog and has been told he has an ability to share his knowledge in a simple and sometimes memorable way.

Feel free to comment and ask any questions. Contact Campbell Hastie m: 027 697 7789.

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