Estate Planning for Children
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 at a later date. However, in failing to create a proper estate plan, many parents cannot adequately protect their children. All parents, with or without significant 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 in the event that they have an untimely passing while the child is still a minor.
Often times, parents do not believe they own a significant amount of assets, which leads them to delay estate planning. The idea of putting it off for "tomorrow," "next week," or "next month" is common among young adults who feel that they have plenty of time to plan for their estate. The reality is that by failing to prepare a proper estate plan, parents cannot adequately protect their children. All parents, regardless of their assets, should establish an estate plan to carry out their wishes for their children. These wishes could include, but are not limited to, a nominated guardian in the event that the parents pass away while their children are still minors.
Your estate planning documents can nominate a guardian and a conservator for your child upon your passing. If you do not nominate a guardian and a conservator, you risk the probate court and/or other individuals making that decision for you. This could be detrimental and against your wishes. Nominating a guardian and a conservator is a vital aspect of your estate planning process .
Unfortunately, it has happened before where children are sent to Child Protective Services to reside with a foster family until the court decides on a suitable guardian. This situation alone gives many families a push to protecting their children through an estate plan.
As previously mentioned, the decision of who to nominate as a guardian can be very difficult and should be considered carefully. Traits and circumstances parents think about when deciding on a guardian include:
Culture and Religion
Distance and Location
You should always have a back-up nominated as guardian in case that the guardian is unable to act the guardian for your children. Having a couple of alternative choices is recommended. At the end of the day it is the court who will appoint the guardian you nominate. It is never a guarantee that the guardian you nominate will get chosen. This is because the court could see a changed circumstance in the guardian's ability to care for your children after your passing. However, nominating a guardian gives the court direction that these are your wishes and the courts take these recommendations very seriously.
Trusts for Minors
Generally speaking, if a person dies without an estate plan, his or her assets are distributed in a manner determined by the state the decedent lived in at the time of his or her passing. The way the state divides your assets may not be the way you wished for them to be divided. A trust builds in the flexibility allowing you to dispose of your assets to your minor children in a variety of ways. You can even restrict the way that your children will receive the assets and the ways that they are able to spend their inheritance.
Trusts give you the ability to either name your adult children as trustees for their own trusts or you can name an independent trustee to distribute the assets to your children according to the terms of your trust. An independent trustee will also help your children protect their inheritance against their current or future creditors. A will-based estate plan or no estate plan will not give you the ability to build in these clauses into your estate plan.
There are special needs trusts, specifically tailored for the purpose of providing designated care to your child with disabilities that ensures that your child will be taken care of after your passing.
Proper estate planning for your children will relieve you of the potential stresses and headaches involved if you do not plan properly. It will give you peace-of-mind knowing that your children's best interests are carried out.