As a parent of young children, your estate plan is an important tool for protecting your children in the event the unlikely occurs.
The importance of Guardianship Designations
The main priority when drafting your estate plan might be who takes care of your children if you became incapacitated or were to pass away unexpectedly. You can use your last will and testament to nominate a guardian or guardians for your minor children. If your designated guardians live in a different city or state, you can also designate an emergency guardian to look over your children while the permanent guardians travels to get to your children.
If you don’t have an estate plan in place, the courts would end up selecting who looks after your children. While courts often appoint close family members as guardians, they may not necessarily appoint who you would want. The children will likely have emotional needs that will be difficult to meet and the courts may not fully understand the specific circumstances of every case. Often, close family friends have better relationships with children than distant relatives, and/or may be in a better position to accept this significant responsibility. In our experience, most parents would like to prevent the courts from interfering with and determining how their children are raised. We believe that no one is better suited to decide how children are raised than their own parents. Regardless of who you nominate, you can always update your estate plan to reflect changes in your and your children’s lives.
A Trust Can Help Protect Your Children’s Inheritance
When it comes to succession planning, i.e. deciding what happens to your assets when you pass away, setting up a revocable living trust for the benefit of your minor children can be incredibly beneficial. As the grantor of a revocable living trust, you can remain the trustee for as long as you are alive and capable. Given the nature of revocable living trusts, you can amend your plans as your children grow and your needs change. You are free to place and remove assets in and out of the trust, and can make any changes you like to the management, distributions, beneficiary, and many other important decisions set out in your trust.
Using a revocable living trust, you can remain well in control of the assets, even after your passing. You are able to appoint a successor trustee who will be in charge of administering the funds on your behalf in the event of your incapacity or passing, until your children reach a particular age (of your choosing). Your successor trustee can be an impartial and trusted loved one or could be a professional trustee such as a financial institution. Regardless of who is managing the trust, they are responsible for following your wishes as expressed in the trust document. You are able to decide how any funds or assets are managed, as well as how and when your children receive assets—either as an outright distribution at a specific time, as a staggered distribution over time, or as a conditional gift.
It is difficult to predict all the possible ways in which a child’s life can change, but a well-drafted trust is able to address even some of the remotest possibilities. Unlike a traditional bequest or gift, a trust can protect a child’s inheritance from unfortunate life events they may experience in the future, such as bankruptcy, lawsuits, or divorce. Not to mention, any assets left in trust do not have to go through the costly and time-consuming process that the probate court imposes on a conventional inheritance.
Planning for Incapacity
Another important part of your estate plan is your incapacity documents. These documents can help ensure that someone is able to make decisions for you in the event that you are not able to care for yourself, whether permanently or temporarily. A financial power of attorney gives permission to a trusted individual to access your accounts in order to pay for the goods and services you and your family may need while you are incapacitated. This means the utility bills, tuition, mortgage, etc. can all be paid even if you are not currently able to pay these directly. Similarly, a medical power of attorney allows a loved one to make medical decisions on your behalf. This can ensure you receive the medical treatment you would prefer even if you are not able to express your wishes at the time. Finally, an Authorization for Release of Protected Health Information, also known as a HIPAA release, allows medical professionals to share your protected medical information with your family. This means your family can get prompt access to your medical records if anything were to happen.
An Estate Plan That is Right for Your Family
Finding the right plan for your children will depend on a variety of individual factors, including your family type (e.g., traditional, blended, single-parent family), the age and personalities of your children (e.g., a responsible older teen vs. a toddler), and the availability of potential guardians, among other factors. After reviewing these factors, we will establish a solid foundation for your children. Regardless of what your particular circumstances are, we are confident we will be able to work with you to find a comprehensive estate planning solution that meets your needs and reflects your wishes.
Often an ounce of prevention can be worth a pound of cure, this is certainly true when it comes to estate planning. Having a comprehensive and up to date estate plan in place can ensure your children are provided for if something happens to you.