By Shannon Miller
Even though only half of Americans say they have a will, couples with minor children should have a will if they wish to name who should care for their children and manage the assets. If there has not been an estate plan, a guardianship established by the court will be required and the court will decide who will have custody of the children and how the assets will be managed including how the monies will be spent.
In addition, the court must distribute all funds left in guardianship to the children when they turn 18. Parents should create an estate plan to avoid this outcome.
The following issues should be considered by parents with minor children when drafting their estate plan:
1. Who will care for minor children in the event both parents die?
Each parent should name the same guardian (who will have custody of the children) and a back up should the original guardian be unable or unwilling to serve. This designation in the will provides the court with knowledge of who the parents wish to raise their children.
Consider the proximity of the guardian’s residence to the children’s current home, the lifestyle and religious beliefs of the guardians, and the financial situation of the guardian. Parents should name the same guardian in their wills to avoid any confusion in the event both parents die.
2. How will your assets be transferred to your children?
In our estate plans, we recommend parents create a testamentary trust inside the will.
I recommend a testamentary trust for several reasons:
1. You can be specific about how you want the funds to be used and can extend the distribution past the child’s 18th birthday for as long as you wish. In some cases, you can give discretion to the trustee to decide when assets will be distributed, allowing the trustee of a testamentary trust to make that decision given the life situation of the child. This feature is what makes the testamentary trust a better option in most situations.
2. You can designate a trustee to distribute the monies who may be different from the custodian of the child. I recommend this action to serve as a check and balance on both the guardian/custodian and the gatekeeper/trustee of the trust assets.
3. The testamentary trust is established inside your will. This means the trust springs to life upon your death and you do not need to set up a separate trust outside the will. You can insert a provision that should your child reach a certain age the assets can be paid to them directly rather than paid to a testamentary trust.
4. You determine how you want the assets to be used such as education, a wedding, starting a business, or travel. The assets may also be designated to be used very broadly to cover health, education, maintenance (of lifestyle) and support (like child support or alimony).
Recently I handled a case where a minor child was left without parents. The mother died of cancer when the child was five. The father did appropriate estate planning and when the child turned 12, he died of a heart attack. There was some debate initially as to who would take custody of the child and fortunately due to the estate planning, the child lived with her aunt as determined in the father’s will and the testamentary trustee was an uncle. This strategy worked well and the child is now in college and going with her family to Ireland to connect with distant relatives thanks to the proper planning by her parents.
These plans are easy to establish but do require action. They can make a difference in your children’s lives.
Shannon Miller is the only board certified Florida Bar Elder Law Attorney in the Eighth Judicial Circuit including Alachua, Levy, and Gilchrist counties. She has helped hundreds of parents write an estate plan that cared for minor children upon their death. She can help you.