Estate Planning for the Young Family
Parents of young children should have an estate plan in place for them. Children can not inherit or own property until they are eighteen years of age. They also can not legally make financial decisions until they are eighteen years of age. Someone else has to make the financial and parenting decisions. You should name the person(s) who you want to handle the financial and non-financial decisions for your child(ren).
A Last Will, for the benefit of minor children, should first focus on naming a person (or people) to fill three important roles:
- Personal Representative. Personal Representative is also known as the Executor of the estate. This is the person who collects the assets, pays the bills and wraps up the estate. This person should be a resident of the state, if possible.
- Trustee. This is the person who will invest and manage the money until the child(ren) is at least eighteen years of age. Many of our clients will extend that age to twenty-one or even twenty-five, because they feel that many teenagers are not mature enough to be financially responsible. You can do this and still allow the trustee to pay for their post-high school education.
- Guardian. Your Last Will also allows you to designate who you want your child(ren) to reside with, in the event of your death. This will require Court approval but the Court will likely honor your choice, unless there is a living parent who has custody rights.
If you have a mentally or physically handicapped child(ren), then you will need a Last Will with a supplementary needs trust. This type of trust contains language that protects the child(ren) and his/her eligibility for public assistance and medical benefits. It also continues for life.
The three roles may be combined in any combination. That is, the same person(s) may be the trustee, the guardian and/or the personal representative. However, it is a good idea to name a back-up as the person(s) may not be able to accept the responsibility for reasons that may not now be apparent. For example, you could name your sister, Sally, as guardian but at the time of need she may be in the middle of a divorce. In that case, she may decline and the responsibility might fall on your brother, Dan, who you designated as a back-up.
I know of one case where a young couple were killed in a car accident in Canada. They had no Last Will. It took a seven year Court fight in Canada and Minnesota for her sister to finally gain custody of their two children. I imagine that the attorneys fees were in the tens of thousands of dollars. Also the children were in limbo for seven years. It was a terrible mess and everyone suffered emotionally and financially.
You may also want to leave instructions for your guardian and/or trustee. For example, you may want to give some guidelines on their religious or educational upbringing.
You might also want to do an ethical Last Will, as suggested by Barry Baines M.D. in his writings. You may want to leave instructions regarding what kind of contact you want the child(ren) to have with their grandparents and other relatives. For example, you might want to instruct your guardians to allow the grandparents to see the child(ren) on holidays. You may also want special provisions in your Last Will if you are not currently married to the child(ren)'s other parent.
It is also important that you change your will if you get divorced or remarry. If you re-marry with young child(ren), you also should have an ante-nuptial agreement to protect your child(ren).
We will not attempt to tell you what to decide. We will draft documents that meet your needs and conform with your values and beliefs. One size does not fit all. It is important that you have a plan in place, because we can not predict the future.