“Co-parenting”, “platonic parenting”, and “parallel parenting”–social terms to describe the reality of many modern families– is becoming the norm. But what happens when one of the co-parents dies?
When a Co-Parent Dies
As devastating as this is for the child, the hardship to a platonic co-parent is just as profound. Where there were two wage earners and two caregivers, there is now only one. The burden is greatest when a co-parent dies without an estate plan. Not only must the surviving co-parent comfort a mourning child, they must also figure out how to collect, and protect, their child’s inheritance.
However, under Texas inheritance laws, when a co-parent dies without an estate plan, the surviving parent may find themselves either (1) unable to access their child’s inheritance because they cannot afford the legal proceedings, or (2) with strictly limited access to this inheritance.
Why Co-Parents Should Estate Plan
Texas has probate and guardianship laws that address a parent’s failure to estate plan, but these laws are not always helpful. Additionally, the legal proceedings involved are costly. This is especially true in the case of co-parents who are not married to each other.
For starters, under Texas inheritances laws, minor children must share their deceased parent’s estate with that parent’s spouse. This is an uncomfortable situation for the surviving co-parent: to collect an inheritance for their child, they must initiate an adversarial legal proceeding against the deceased parent’s spouse.
Even where there is no spouse involved, the surviving parent will have another dilemma when there is no estate plan: asking a court’s permission to access their child’s inheritance. That’s because Texas default inheritance laws have only one goal–to protect the child’s best interest. The state “protects” this interest by strictly limiting a guardian’s access to the child’s funds. Further, Texas family laws unequivocally state that parents have a duty of support. And this duty is not eliminated or minimized when one of the child’s parents dies. In other words, under these laws, the surviving parent is 100% responsible for their child’s financial needs and the child’s inheritance may only be accessed under the most extraordinary circumstances.
How Co-Parents can Estate Plan, Successfully
Whether you are co-parenting, parallel parenting, or platonic parenting, you need a contingency plan. If you are parallel parenting, you probably have no influence over what your co-parent does. But, you can use these same guidelines to protect what your child inherits from you, while making sure they never lack what they need.
First, consult your financial advisors about life insurance. The best way to replace lost earning potential is through life insurance. And the best time to buy life insurance is when you are young and healthiest and can pass the medical underwriting process. If your employer offers life insurance, consider paying for additional coverage. In sum, life insurance is the cheapest and most effective way to provide for a young family at a time when “lifetime” savings may be minimal.
Second, consult with your estate planner about creating a trust for your child’s benefit. These trusts can be as simple as a testamentary trust; a trust in your Will that is effective only at your death. When you create a trust, you get to choose the trustee who will manage your child’s money. You also determine the age your child will be allowed to manage their own money (whereas, state law presumes everyone is responsible at 18). You can also choose how this money will be distributed. In the case of a spendthrift co-parent, or one who has a spouse you don’t trust, you can choose, instead, to have the trustee make distributions directly to the institutions providing for your child’s needs rather than to the co-parent. In doing so, you can achieve the same goals as state law, but without the financial hardship to your child.
Third, verify that all beneficiary designations on your financial accounts are payable to the trustee of your child’s trust and NOT the child or some other individual (if you have a spouse, there may be other considerations there). A beneficiary designation is a contract and contracts are highly regarded in Texas. Meaning, if you choose someone other than your child, or your child’s trustee, that beneficiary will have an absolute right to those funds and owes no duty to your child. Alternatively, if you name your child as beneficiary, the contract usually requires a caregiver to initiate a guardianship proceeding if they need to access the funds prior to the child turning 18.
Finally, if you are successfully co-parenting, you can talk to your co-parent about your contingency plan. These conversations should emphasize the shared goal of providing for the child’s financial and emotional needs. Stick with goal-oriented, non-judgmental words. If you need assistance with how to approach these conversations, contact your estate planner.
If you would like legal assistance creating a trust for your child, or advice on how to estate plan in a co-parenting situation here in the Dallas, Plano, McKinney, Frisco, Allen, & Prosper area, contact me , an estate planning attorney and probate attorney for a consultation. In addition to in-person consultations, I am also available by teleconference and videoconference.