Many parents put off estate planning because they do not think they have substantial assets to protect. This outlook is common among young adults who think they have plenty of time to accumulate wealth and plan for it later. However, in failing to create a proper estate plan, many parents cannot adequately protect their children. All parents, with or without a lot of assets should have an estate plan in place to set forth their wishes for their children which includes, among other things, the nomination of a guardian if they have an untimely passing while the child is still a minor.
Appointing a Guardian
If you are the parents of minor children or children with special needs, it is extremely important to establish a legal guardian. The designated guardian will be the person responsible for caring for your child if you pass away. Without a legal guardian in place, your child may be placed by the court with a person of its choosing. By naming a legal guardian, you are ensuring that your child will be cared for by a person you have chosen and trust.
Selecting and legally appointing a guardian can be a very difficult decision and one that should not be made without serious consideration. The individual selected should provide stability for your children in the difficult transition and ultimately continue care in a fashion with which you are comfortable. In addition, you must complete the necessary steps to ensure this person not only has the authority to look after the physical well-being of your child/loved one, but also the legal ability to manage his or her affairs.
If the guardian you have selected in your estate plan in unable to raise your children upon your passing, you should have two alternates who also meet the aforementioned criteria. This will ensure that your children are left in the hands of trusted relatives or friends and not in the court system. If you have multiple children and would like to appoint different guardians to raise them separately, you may also outline multiple guardian appointments in your estate plan, however, this situation is generally not regarded as ideal for close siblings.
All appointed guardians must ultimately be approved by the court at the time of the parents’ passing. If a biological parent is still living, they will usually be named the guardian of the children unless evidence is presented this individual is unfit to provide care to the children in question.
Trusts for Minor Children
It is recommended that all parents of minor children create a trust designed to safeguard the inheritance for their children. Such a trust gives you the ability to outline how much money your children will receive, the age at which they will receive the inheritance and to an extent how they are to spend this money. This allows you to designate funds for their college educations and give them their inheritance at a certain age, ensuring that they don’t waste their inheritance on fancy cars when they turn eighteen years old. The trust can also protect against potential creditors or even divorce. Trust funds can also provide support to your children until they reach the age at which they may receive their inheritance. In your estate plan, you must also name a trustee who can ensure this money is handled properly. It is important to note that the trustee may differ from the guardian selected in your estate plan. This is recommended if the guardian is good with children but not with money.
Trusts are important because they ensure you still retain control over your wealth after your death in effect giving you greater control of your children’s futures. Trusts allow you to set aside funds for a surviving spouse ensuring that your children will be provided for even if your partner is not wise with money or remarries. A trust allows you to outline how the trustee is to budget funds for each child. If one child has a special need or requires additional training to develop a talent, your trust may outline these appropriations. This is particularly true if you have a child with physical or mental disabilities who may require significant care beyond his or her 18th birthday.
If you have not yet created a plan that adequately provides for your children, we encourage you to contact our knowledgeable estate planning attorneys today.