Although estate planning is important for everyone, for the parents of minor children estate planning takes on a heightened importance. Knowing that your children will be protected if something happens to you and ensuring that they will be well provided for make estate planning a necessity, not an option, for parents with minor children. If you are new to the concept of estate planning, as many parents are, you may not know where to begin or what need to be included in your estate plan. Consulting with an experience estate planning attorney is the best way to ensure that your estate plan includes everything it should. In the meantime, an estate planning attorney at German Law offers the following tips for parents with minor children.
Who Will Care for Your Child?
The top priority for most parents when considering the possibility of their own death is who will care for their child. If your child’s other parent is alive, willing and able to take over the care and custody of your child then that is likely what will occur. Often, however, the other parent is not willing or able to care for a child, leaving the issue of legal guardianship for a court to decide. Although a judge must approve the appointment of a Guardian, you have the opportunity to let the court know your wishes by nominating a guardian in your Last Will and Testament. Some factors to consider when nominating a guardian include:
- Familiarity – is your potential guardian someone with whom your child has an established relationship?
- Proximity – does the guardian live close by or is he/she willing to relocate?
- Ability – does your nomination have the financial and practical ability to care for your child?
- Beliefs/philosophies – choosing a guardian who shares your basic parenting style and belief system should prevent the additional stress of your child having to adjust to a whole new way of doing things.
- Willingness – never assume that someone – even a family member – is willing to be your child’s guardian.
Transferring Assets — Your Child’s Inheritance
Leaving behind an inheritance to a minor child is not as simple as leaving an inheritance to an adult because minor children cannot inherit assets directly. Someone must manage and control any assets you gift to your children until your children are legally able to own them. If you fail to plan ahead, the person who has legal guardianship over your children will likely be the default custodial beneficiary for them. This may mean that your ex-spouse would control your children’s inheritance. Even if you are comfortable with your child’s guardian having control over the inheritance you leave behind you may not wish the balance to be handed over to your child when he or she reaches the age of majority. If the inheritance is substantial, leaving it directly to an 18-year-old may not be advisable which is why many people choose to create a trust.
A trust offers numerous advantages over leaving a direct gift to a child. When you create your trust, you name a Trustee. The Trustee manages and invests the trust assets and administers the trust terms. Appointing a professional trustee ensures that the funds will be managed responsibly and prudently. Although disbursements will be made to your child’s guardian, the guardian will not have access to the principal of the trust unless you specify that he/she may access the principal and under what conditions that may occur. If you choose to give the Trustee discretionary powers, decisions about when and why funds can be disbursed can be left to the Trustee for emergencies. The other important advantage to a trust is that the trust can continue to manage the trust assets long after your child turns 18 years old. A trust can provide staggered disbursements as your child ages and matures, providing more reassurance that the inheritance you leave behind will not be squandered.
Contact a Estate Planning Attorney
Please join us for an upcoming FREE seminar. If you have additional questions or concerns about estate planning, contact a estate planning attorney at German Law by calling 701-738-0060 to schedule an appointment.