Whilst we all agree that having children brings us much joy and excitement, with parenthood comes great lifelong responsibility. Children need to be clothed, fed, nurtured, and guided. Sadly, many single parents have no support from another parent, which can leave them to worry over their children’s future, especially should anything happen to them, their only parent.
None of us want to think of that worst case scenario, least of all single parents, but planning ahead is a necessity if you want to ensure your children have the best start in life. Single Parents on Holiday have written up some practical tips on how solo parents can safeguard their children’s future, helping them to plan for every eventuality so they can rest assured that their children are always supported.
How to leave your children safe and secure – practical tips for single parents:
Sometimes the unexpected happens and not every parent is able to see their kids grow up. While we all hope to be around long after our children reach adulthood, it’s important to make sure your children are safe and supported should you pass away before they’re fully independent.
Taking out life insurance
Life insurance can help to ensure that your children will have enough money to pay inheritance tax on your estate, continue their education, or that guardians can take care of your children’s medical needs, take them on holidays, and much more. Life insurance policies typically pay out a lump sum of money to the person you name as your beneficiary. If your children are the named beneficiaries, it is important that you appoint one or more trustees who you trust are able to look after the money until your children reach the age at which you would like them to receive the lumpsum. This can be 18 years of age or older.
There are lots of different life insurance policies out there. If you want to ensure that your children don’t have to move out of their family home, you could take out a decreasing term life insurance. This means that in the event of your death the remaining mortgage will be paid off. Once you have paid off your mortgage, the cover ends. Because the value of any potential pay-out decreases as your children grow older and you pay off more of your mortgage, this type of cover is often cheaper than standard life insurance. If you are keen for your children and their appointed guardian to continue living in your home, it is worth noting that if the property is worth more than £500,000, your children will pay inheritance tax, in which case you need to ensure there is money in your estate to do so.
Writing a will
While life insurance can take care of your children’s financial future, you still need to deal with the matter of guardianship. If there is no other parent who is able and willing to take care of your children, and/or if you want to avoid an estranged parent or family member top gain custody, it is vitally important to have a will in place that names a guardian of your choice for your children. If you don’t leave a will, a court will decide for you. This can cause family feuds but more importantly, cause your children unnecessary grief in an already traumatic situation. Naming a guardian in your will and discussing this with all parties concerned not only will this give you peace of mind, but it will also reduce family disputes later.
Naturally, a will can also help secure your children’s financial future if you have assets to pass on to them. If you don’t have a will, and have no partner, then your assets will be inherited by your children in equal shares. However, certain scenarios could lead to your children missing out if you do not execute a will, and probate support service professionals are experts in this kind of situation. If you have a new partner, for example, that partner would inherit before your children do. They might then remarry and/or have more children, and/or spend the money before they die, meaning your children inherit little or nothing.
Setting up a trust for your child
If your child is going to inherit assets or money, it is worth setting up a trust that they can access when they’re 18 (or older if that is your preference). This will mean that their money is safe and may also be exempt from inheritance tax. You could even set up a trust that pays your child a set amount each month. It can be a risk giving a young person a large amount of money, especially if they don’t have much experience with budgeting. Alternatively, if you want the money to be used for education, you may be able to stipulate this in the terms of the trust. Equally, if your guardian may need help paying for the children’s school fees, larger purchases, family holidays, medical bills, etc. money can be paid out if it is used for the child’s benefit.
Saving money for their future
One of the best ways to support your children in the future is to start saving money for them. While your will and life insurance will help them in the event of your death, a savings account will serve your kids well even if you are still around to offer your support.
Many parents put money aside for their children, but opening an account in your child’s name could afford you much better rates of interest than a savings account does. A Junior ISA is a great way of putting money away for your children. You can currently (tax year 2023/24) pay up to £9,000 a year into a Junior ISA, which will give your children a decent interest rate and tax-free returns.
No matter how little money you have, if you invest wisely, your kids might have a nest egg that will help them buy their first car, help with their education, or even get them onto the property ladder. That is why it is also worth considering opening an investment ISA for your children. While the world of investments can be volatile, there’s a chance that your kids could make some serious gains from birth until they are 18. Investments often work best when they’re made over a long period of time and can have much higher returns than savings, which may depreciate due to inflation depending on the interest rate. However, because investments could result in your children having less money than you paid in, it’s always best to pair them with savings to spread your risk.
There are many ways of saving money as a single parent even if you struggle with everyday bills. Don’t put saving off. Instead of getting lots of unwanted toys, why not ask relatives and friends to pay some of your children’s birthday and Christmas money into your children’s savings account or ISA?
Ensuring that their children are safe, supported, and secure in the future is any parent’s wish. Yet it is especially important to single parents whose number one priority is their children, yet who often have more limited resources. Whatever your situation is, following one or all our practical tips on how to protect your children’s future will leave your kids safer and more secure. Don’t hesitate – you have all the necessary skills to make it happen – family budgeting strategies, time management skills, social contacts.
About the author:
Single Parents on Holiday is the no. 1 tour operator in the UK for single parent group holidays. We have provided fully-organised holiday packages for single mums and dads and their children since 2005. A few years ago we decided to add single travel deals to our portfolio because many of our customers now had grown up kids but wanted to continue travelling with us. This is why we now offer solo group holidays for single travellers without kids. Check out our new beach trip and our ski programme for 2023/2024!
