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BLOG: Attention Parents: The Best Gift You Can Give Your Minor Children

Posted on Thursday, February 2, 2017 at 8:36 AM by Elizabeth Chrisp

As a new parent, I quickly learned that there are a multitude of things that parents worry about and estate planning is not at the top of the list.  Having a will that names a guardian for your minor children and establishes a testamentary trust, however, may just be one of the best things you can do for your family. 

What is a guardian?

A guardian is someone parents select to care for their minor children in the event that the parents cannot.  If a guardianship becomes necessary and the parents have not named a guardian for their minor children, generally the court, in its own discretion, will decide who should raise the children.  Although a court will have the minor children’s best interests in mind, the court’s decision may or may not align with the parents’ wishes. 

How do I designate a person to become a guardian if a guardian needs to be established in the future?

Generally, a guardian is designated in each of the parents’ wills.  This also ensures that each parent has an estate plan that corresponds with the others and determines what happens to the family’s assets in the event that minor children are left with a guardian.

What should you consider when choosing a guardian?

Each family presents a different dynamic, but in general, parents should consider the following:

  • Whose parenting style most aligns with yours?
  • Whose values or religious beliefs most closely match yours?
  • Who can emotionally, physically, and financially accept the responsibility?
  • Does your child feel comfortable with someone already?
  • Would your child have to move far away?
  • How do you feel about your child being raised with the other children, if any, in that household?
  • Would your child be able to easily spend time with other family members?

After asking these initial questions, you may be able to narrow your list to a few key people.  Next, talk to those remaining people and ask them whether they would be willing to accept the responsibility.  Sometimes the guardian or guardians you prefer may not express a clear desire to assume that role.  Although most parents want to keep their children together, different guardians can be named for different children—i.e., your children are far apart in age and each has a special attachment to a different person, or your children are from different marriages with separate sets of relatives and friends. 

Should I name an alternative guardian?

It is strongly recommended that parents name an alternative guardian in the event that the first guardian is unable or unwilling to serve.  In any event, you most likely debated between two or more people while considering the questions posed above.  For example, perhaps your sister and her husband were strongly preferred as guardians because they have similar values and reside in the same school district, but your brother-in-law and his wife came in a close second only because they live a few counties away.  Naming both—your sister and her husband as primary guardians and your brother-in-law and his wife as alternative guardians—ensures that your preferences, in that order, are followed.

How can I preserve my assets for my minor children?

There are different ways to preserve assets for minor children, but, in general, establishing a testamentary trust is preferred.  A testamentary trust ensures that after you death, your assets, including complex assets such as a family business, land, or significant amounts of money, will be distributed to your children on an as needed basis instead of in a lump sum amount when your children turn 19.  A testamentary trust gives you much more control over the money and assets you leave behind because you can restrict how the trust is used until your children reach an age that you believe they will be mature enough to manage the trust on their own.  Typically, parents establish testamentary trusts for the “health, safety, education, and welfare” of their children, parceling out a little money at a time, with a full distribution at a later age.  You chose the age at which you believe your minor children will receive the full distribution; typically the age is set between the ages of 24 to 26, but you could set the number as high or as low as your family sees fit.  Tailoring a testamentary trust in this manner ensures that the trust goes towards necessary expenses such as college books and medical expenses and is not squandered on unnecessary assets when your minor child turns 19.

Who should serve as trustee?

If you decide to preserve your assets with a testamentary trust, you will need to name a trustee.  A trustee is someone who oversees the trust for your children.  You may designate the same person to be guardian and trustee.  By naming one person to serve in both roles, the guardian has access to the trust for your children and can access the trust without having to check in with someone else.  Other families separate the responsibilities.  For example, you may select your sister to be guardian, but want your brother-in-law, who has a better handle on finances, to be trustee.  This scheme will allow your brother-in-law to have a role in raising the children, just in a different capacity than guardian.  This may also ensure that both parents’ families are included.  Consider how well your guardian and trustee get along.  If they have a good relationship, the separation of roles could work well. Problems are bound to arise, so choose two people who can work on solutions together.

How often should I reconsider my guardianship and trustee choices?

As with your general estate plan, we encourage our clients to re-evaluate their guardianship and trustee choices when major events occur (such as a death in the family or subsequent births) or at least every three to five years.  For example, your guardians may have moved out of state or experienced unanticipated health problems.  Periodically reviewing and monitoring who you selected as guardian and trustee ensures that your wishes stay current.

It can wait until we go on that big vacation, right?

We all know that statistics show that you are more likely to get in a car accident on the way to the airport than die in a plane crash.  For me, a daily commuter, that is all the reasoning I needed to finally start the estate planning discussion in our home.  Although life as a parent of minor children can be hectic, creating or updating your estate plan will be well worth your time.

 

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Posted in: Family, Wills, Trusts and Estate Planning
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