Securing Children in the Event of Parents' Death: Comprehensive Guide for Families
18 Apr 2025
3
Minutes
Katrin Straub
CEO at nextsure
The thought of one's own death is difficult, yet for parents, planning ahead is essential. Learn how you can protect your children in case of an emergency, from financial support to guardianship arrangements. This is how you ensure security for the future of your loved ones.
The topic in brief and concise terms
A term life insurance policy with an adequate coverage amount (e.g., five times the annual gross salary) is fundamental for securing the financial future of your children in the event of death.
Ensure guardianship for minor children through a handwritten or notarized guardianship order to best meet the welfare of the child.
The statutory orphan's pension (around 10% for half-orphans, 20% for full orphans of the deceased's pension) is often not sufficient; private provision and a will are therefore essential.
Immediate Measures: Key Points for Securing Your Children
A term life insurance policy is often the first building block. It closes financial gaps after a death. At least five years' gross salary is considered a guideline for the insurance sum.
With a guardianship arrangement, you appoint a guardian. This person looks after your minor children. The family court significantly takes your wishes into account.
A will regulates the distribution of your estate. It can also supplement or include the guardianship arrangement. Without a will, the statutory succession applies.
The state orphan's pension provides basic provision. Orphans receive about ten per cent of the deceased's pension. This amount is often insufficient for living expenses.
An emergency folder with all important documents helps the bereaved. It should contain contracts, arrangements, and powers of attorney. This way, everything is quickly at hand in case of emergency.
These initial steps form a solid foundation. We will delve into the individual aspects below.
Ensuring Financial Stability: Term Life Insurance and Orphan's Pension
Term life insurance (RLV) is a central pillar. It secures your children's standard of living and education. The sum insured should cover loans and ongoing expenses for at least five years.
Name your children as beneficiaries. For minors, a guardian can manage the money in trust. A clear regulation of the right of access is crucial.
The statutory half-orphan's pension amounts to ten percent of the deceased parent's pension. The full orphan's pension is twenty percent. These amounts usually only cover basic needs.
Precisely determine your children's financial needs. Consider education costs of several tens of thousands of euros. Daily living expenses also add up over the years.
In addition to the RLV, there are other pension options. An education insurance can specifically build up capital for studies or starting a career. These products often offer guaranteed benefits after 15 or more years.
A solid financial foundation has been established. Now, let's look at the legal arrangements.
Creating legal certainty: Arrange custody and wills definitively
A guardianship provision specifies who becomes a guardian. It must be handwritten and signed. Alternatively, a notarised certification is possible, which may cost around 75 euros.
Choose the guardian carefully. Discuss this responsible role with the person. The family court examines the suitability of the appointed guardian.
A will governs the succession and the distribution of assets. It can also include instructions regarding guardianship. Without a will, the statutory succession applies, where children are first-order heirs.
For unmarried parents, a separate guardianship provision is required for each parent. For married couples, a joint document is sufficient. The provision of the last surviving parent applies in the case of different nominations.
Review these documents every three to five years. Life circumstances and relationships may change. Adapting them secures your current intentions.
After the practical measures, we now delve deeper into the experts' details.
Leverage expert knowledge: Inheritance law nuances and tax optimisation
Without a will, the statutory order of succession applies. Children inherit in equal shares as heirs of the first order. Spouses inherit alongside the children.
Even in cases of disinheritance, children have a right to a compulsory portion. This amounts to half of the statutory share. A complete disinheritance is only possible in extreme exceptional cases.
Inheritance tax offers children high allowances. Four hundred thousand euros per child and parent are tax-free. This allowance can be used anew for gifts every ten years.
Additionally, there are maintenance allowances for children. These are age-dependent and can amount to up to 52,000 euros.
Our expert tip: Thoughtful gifts during one's lifetime can significantly reduce the later inheritance tax burden. Consulting on this is often advisable.
However, there are also special situations and pitfalls to be considered.
Mastering special life situations: Security for single parents and blended families
For single parents, the protection of children is particularly urgent. A term life insurance policy is often the most important pillar here. The sum insured should cover living expenses until the children become independent.
In blended families, the situation is more complex. Stepchildren are not automatically legal heirs. Clear testamentary provisions are essential in such cases.
Parents can also leave behind debts. A term life insurance policy can secure loans, such as a mortgage. This prevents children from starting life with debts.
Our expert tip: After a separation or divorce, all insurance beneficiaries should be reviewed. This ensures that the desired individuals are considered in the event of a claim.
Protection is a dynamic process that requires adjustments.
Keeping provisions up to date: Long-term planning and regular adjustments
Dynamically adjust insurance sums. With the birth of another child or salary increases, an increase is often necessary. Many tariffs offer follow-up insurance guarantees without a repeat health check.
The term of a term life insurance is crucial. It should last at least until the youngest child's 25th birthday. This way, education is usually completed.
Also think about your own protection. An occupational disability insurance secures the family's income if you can no longer work. This relieves the family during your lifetime.
Our expert tip: Plan a check-up every three to five years. An expert can help identify gaps and make optimizations. Your life situation changes, so should your provision.
Comprehensive protection provides peace and security. Take your provision into your own hands.
Request an individual risk analysis now: Have your insurance situation checked free of charge and receive concrete optimization suggestions.
More useful links
The Deutsche Rentenversicherung provides comprehensive information on the orphan's pension in Germany.
Further details on pensions for survivors can be found on the pages of the Deutsche Rentenversicherung.
The form package for applying for the orphan's pension is provided by the Deutsche Rentenversicherung.
Frequently asked questions regarding the review of the orphan's pension are answered by the Deutsche Rentenversicherung in their FAQs.
The Statistisches Bundesamt (Destatis) offers tables on infant mortality in Germany.
Information about death rates and life expectancy in Germany can be found at the Statistisches Bundesamt (Destatis).
The Statistisches Bundesamt (Destatis) provides data on causes of death in Germany.
FAQ
As a married couple with children, do we need life insurance for both parents?
Yes, it is often advisable for both parents to take out a term life insurance policy, especially if both contribute to the family income or one takes on the main responsibility for childcare and household duties, whose absence would also lead to high costs. The amount can be adjusted individually.
Can I directly designate my children as beneficiaries in the term life insurance, even if they are minors?
Yes, that is possible. However, it is advisable to appoint a guardian or trustee to manage the insurance sum until the children reach adulthood.
What is the difference between a custody order and a custody power of attorney?
The custody arrangement governs guardianship in the event of the parents' death. On the other hand, the custody power of attorney takes effect when parents are unable to exercise custody during their lifetime (e.g. due to illness).
How often should I review my estate planning documents (will, guardianship arrangement)?
It is recommended to review and, if necessary, adjust these documents every three to five years or at significant life events (e.g., the birth of another child, divorce, substantial changes in assets).
What happens if the guardian named in the custody agreement is unable or unwilling to take on the role?
In this case, it is advisable to also appoint a substitute guardian in the custody arrangement. If this person is unable or unwilling to take on the guardianship, the family court will decide.
Does inheritance tax apply to the payout of a term life insurance policy?
If the beneficiary is not the policyholder, the amount paid out may be subject to inheritance or gift tax. However, allowances apply (e.g. 400,000 euros for children). A cleverly structured contract can help minimise taxes.
