Estate planning is incredibly important for nearly everyone, but the importance of good planning becomes even more essential when you have children.
Every parent wants to provide as many opportunities and advantages as they can for their children, and passing on your assets in order to help give your heirs financial security is an excellent way to do so. But if your children are still minors, there are some unique factors you have to consider when you plan your estate.
Generally, minor children rely on you for nearly everything, and if anything were to happen to you their lives could change drastically. Below we’ve outlined three of six special factors to consider when planning if you have minor children. Please check back for Part II of this blog where we will detail the final three factors.
First and foremost, you need to establish who will care for your minor children if anything happens to you. Generally, your spouse would be that person if you were the only one to pass away, but you also need to plan for who would care for them if both parents were no longer able to do so. Do not take your choice of a potential guardian lightly. Be objective and do not allow emotion to cloud your judgement. Who would provide the best combination of character and financial stability for your children? The guardian role may actually be bifurcated to separately nominate a guardian of the person (to take care of children) and a guardian of the property (to take care of any assets left directly to children). Finally, who would take care of your children if you and/or your spouse were temporarily unavailable or if the guardian you chose lives out-of-state and must travel to reach your children? For this reason, short-term guardians need to be nominated; otherwise, your children may end up in the care of the state.
Do you want your children to receive their full inheritance, all at once, at age 18? For most people, the answer is a resounding “NO” due to concerns about financial maturity at that age. But, without proper planning, the default under the law is exactly that – full rights to inheritance at age 18, with no restrictions. Fortunately, there are ways to ensure that this does not occur. Assets can be kept in trust for a child until he/she reaches a pre-determined age; or, assets might be kept in trust indefinitely under the watch of a dependable trustee who has the power to make distributions when appropriate.
Not only do you need to decide how and when you want your minor children to receive their inheritance or insurance money from your death, but you also need to decide who will administer your will and be in charge of disbursing the assets according to your wishes. As with guardianship, this will often be your spouse first and foremost, but you need to make a plan for an executor should you and your spouse both pass away at the same time. You need to have complete trust in your executor that they will carry out your wishes and make sure your kids get the assets they are entitled to.
There is a lot at stake when it comes to planning your estate if you have minor kids. If you do not take the time to make a sufficient plan, and the worst happens, then the courts will decide what happens to your estate and your children. Make sure you have a strong estate plan that will ensure your kids are taken care of the way you want them to be. Call the Law Office of John Mangan and let us help you start the estate planning process, and don’t forget to check out Part II of this blog for more estate planning factors to consider for parents with minor children.