It is often thought that estate planning is just for older people who are more established in their careers and lives and have more to plan for, when, that could not be further from the truth. From individuals planning for themselves, to married couples with young children, to retired adults, everyone can use some sort of planning. This post will focus on estate planning for individuals or couples with a minor child and address some of the topics that they should be consider when planning for their child.
If you ask anyone with a minor child what their biggest concern is should they as parents, pass away, and most will answer that their largest concern is making sure their child is well taken care of. They generally do not mean this in the financial sense, but more in the sense that they will be raised in a good home and provided with the proper support system to help them grow. Here are a few things you should consider when planning for your minor child.
The first question you want to ask yourself, if you pass away, who would you want to raise your child? That person or people need to be named in your Last Will and Testament. If your preference is not outlined in your documents, there is a chance that a legal battle will ensue to determine the best Guardian for your child(ren). The preference you have indicated in your Last Will is generally honored by the courts.
When considering who to name as Guardian, it is worthwhile to consider, the proposed Guardian’s religious and social values, the Guardian’s other children, where the Guardian lives and the arrangements available for your child.
Once you have decided who would be best suited to act as Guardian for your child, you need to decide how your assets should be distributed. Without a plan, at your death, your assets would be given to the Guardian of your minor child and held for your child until they turn 18. At that point, the assets would be given to him or her, regardless of how mature or financially savvy he or she may be.
Rather than having money go outright to your child, you should consider adding a trust (which can be included within your Last Will) to indicate how the money left for your child should be distributed. You may want the money held for the child’s benefit until they reach a more mature age while allowing the Trustee (the person responsible for managing the money) to make distributions for your child’s education, support, or other needs. Including a trust within your documents allows you to influence and determine the best ways for your children to receive the money you have left for them.
Additionally, if you have multiple minor children, you need to determine if you want money split for each of them upon your passing or if you want to use a “common pot trust.” A common pot trust holds the assets for all your children at the same time and only divides the assets between them when your youngest reaches a certain age. Using this technique allows your Trustee/Guardian to account for the differing needs of each child without being restricted to a predetermined amount of money (one child may have special needs, while another may need additional funds for their expensive talents, while yet another may have more medical concerns).
While we obviously hope to never encounter a situation where minor children are left without a parent, planning ensures that children are cared for in a manner their parent desires while also leaving a lasting legacy for children.
Please contact our office to discuss your estate planning needs with one of our attorneys. We are back in the office and scheduling in person, telephone, and Zoom meetings to assist you with your planning.
Andrew E. Gindea, Esq.
SACHS SAX CAPLAN, P.L.
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