When a parent dies, a dependent child suffers one of the most painful experiences of their life. The emotional loss is significant, however lurking below the surface are legal and financial issues that can have a long-term impact on the child’s growth and development.


The highly publicized deaths of Michael Jackson and Anna Nicole Smith dramatize what can happen to children when they become pawns in an adult tug of war. The issue is real, since approximately one in 20 children will experience the loss of a parent before they reach the age of 18, according to a U.S. Bureau of Census report. Closer to home, how would your dependent children be cared for in the event of your premature death?

Ronald V. Johnson, vice president and associate counsel at KeyBank in Cleveland, Ohio, advises KeyBank’s Wealth Segment in helping to build, preserve and transfer wealth for a wide variety of clients. “My recommendation for parents with dependent children would be to consult with an attorney familiar with fiduciary relationships, income and transfer taxes, and is willing to understand their family situation. Then work together to develop a family estate plan that fits their family situation and that they can afford.”

The basics

Parents should start with a basic estate plan which includes a will, a durable power of attorney and a health care directive. These documents will help minimize confusion and conflicts during a time of family stress. They should also make sure that the named beneficiaries on pension plans, insurance policies, IRAs and similar contracts are current. Minor children should not be named as direct beneficiaries on these contracts.

A will directs what will happen to an individual’s assets when they die. An executor is appointed to make sure that the will is processed correctly and that its terms are carried out. In addition, for minor children, a guardian should be named to care for them until they become adults.

Barry Brooks, president and CEO of the Brooks Insurance Group in Cleveland, Ohio, recommends, “parents should work with a life insurance agent to conduct a ‘care review’ to determine their life insurance needs in the event of the premature death of one or both of the parents. Additionally, they should review the plan every 3-5 years.”

The death of a parent is a tragedy for a dependent child. However, the legal and financial burdens can be lessened by proper planning. Take time today to arrange a meeting with your attorney and insurance agent to get the process started.

(Michael G. Shinn, CFP, Registered Representative of securities and investment advisory services offered through Financial Network Investment Corporation, member SIPC. Visit http://www.shinnfinancial.com for more information or to send your comments or questions to shinnm@financialnetwork.com. © Michael G. Shinn 2010. Neither Michael Shinn nor Financial Network provides legal advice. Please consult a legal professional before implementing any strategy.)

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