Do You Have Minor Children?
If so, you want to protect them in every possible way, including arranging for their care should something happen to you and their other parent. The following are some key considerations when it comes to protecting your kids.
Important to know
By law, minor children cannot inherit your assets. If you fail to create a trust and appoint a trustee to manage assets for your minor children, the probate courts will appoint a guardian for these assets and the person the court chooses may not be the same person you would have chosen.
Who will care for your minor child if something happens to you?
If their other parent is no longer living, incapacitated or otherwise not qualified to serve, you need to name a guardian who can provide care for your child and manage the assets. If you don’t appoint a guardian, the court will … and that is not a decision you should leave to strangers. In many cases, clients select the same person to serve as guardian of the person and trustee of the asset management; but not always. In some cases, those responsibilities are split. For example, a beloved aunt or close friend might be an ideal and loving guardian for your child but isn’t all that good with money management. In this case, you might want a different individual (or financial institution or even trust company) to serve as trustee and manage the assets.
IMPORTANT TO KNOW: Always appoint a backup guardian in the event the primary guardian is unable or unwilling to accept that role.
Most parents establish a trust to cover expenses for health care, education, maintenance, and support of minor children. Deciding when the balance of the trust assets are distributed is up to you, the parent. Distribution can occur any time after your child turns 18. Generally speaking, a distribution date is selected based on the amount of assets left to the child and the ability of the child to manage assets.
IMPORTANT TO KNOW: You can amend the trust over the years as your child grows, based on their needs, abilities, aspirations, and maturity level. In other words, it is a flexible arrangement and one that you can make changes to at any time. You have peace of mind knowing your child, whatever his or her age, health, maturity level, etc. is protected as you see fit should something happen to you.
What happens when you have more than one minor child? You have options; including one called a “pot trust”. A pot trust covers all the children until the youngest reaches the trust termination age of the youngest child. This ensures all of them are covered and cared for until they become adults. Another option for multiple children is to set up separate trusts for each.
Protecting your minor child (or children) is every parent’s responsibility. Knowing you have options and flexibility to make adjustments over time is reassuring and makes it easier to get started. Life is uncertain … what is more important than taking good care of your children? This is all part of estate planning … and I can help.
IMPORTANT TO KNOW: I offer a review of estate planning documents, that I have prepared, every three years to ensure your estate plan is current and meets your needs.
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