Estate Planning for Minor Children
Revocable Living Trust for Parents
A Revocable Living Trust as a popular estate planning tool that distributes your assets upon your death. Furthermore, parents may name guardians of their minor children in their Revocable Living Trust. Naming of a guardian for your minor children is an important decision. Generally, the guardian of the minor children will be listed in the Will or otherwise known as a “Last Will and Testament.” The Will and Revocable Living Trust will coordinate with one another.
Trust for Minor Children
A popular estate planning tool is the use of a Trust for Minor Children. A Children’s Trust is an estate planning technique to provide asset management and distribution of assets from one generation to the next. Generally, a successor Trustee will be responsible for managing the Children’s Trust. A children’s trust is critical because most parents want to avoid probate court and litigation expenses. A Children’s Trust is often a sub-trust within a Revocable Living Trust. A sub-trust means that a children’s trust is part of the parents’ overall estate planning and trust strategy.
Often, parents have major assets to distribute to their minor children upon both parents’ death. These assets include life insurance, real estate and home ownership, investment real estate, retirement accounts, and business interests, among other assets. One of the roles of the estate planning attorney is to set up an estate plan that minimizes conflicts and is realistic. Parents name friends or other family members to be their guardians for their minor children.
1.Guardian of the Estate
The guardian of the estate is responsible for managing the finances of the minor children. Generally, an estate plan should consider whether a person or co-trustees should manage the wealth of your minor children. One of the factors in making this decision is the amount of assets a person is responsible for managing.Simplicity is another important factor. For example, having a wife’s family manage the finances of the minor children while the husband’s family is responsible for the day-to-day parenting is a complicated matter. A major factor to consider is family peace and simplicity. A key consideration is how a person at is maintaining financial records and getting along well with others. Age may also be a major consideration, as an inexperienced or elderly relative may not be the appropriate person to manage a substantial amount of wealth. Health issues and energy may also be a major concern for parents and grandparents.
2.Guardian of the Person
A guardian of the person is responsible for making non-financial decisions such as healthcare and educational decisions. One person may be a good parent, but lack solid financial skills. Parents may determine that it is best to have one person, or a family be responsible for the guardian of the estate and guardian of the person roles.Most families decide to combine the guardian roles for minor children, but it depends on your specific circumstances. An experienced estate planning and children’s trust attorney is vital to assist families making these difficult choices in a practical manner.
Here are several questions that parents should consider asking when deciding on their children’s trust:
- Who should be the Trustee or Successor Trustee(s) for the Minor Children’s Trust?
- Do We Want to Provide for Unborn or Adopted Children?
- Define when a distribution of assets may be made to the minor children and at what age?
- When Can Assets Be Touched by the Minor Children?
- Should a Corporate or Professional Trustee Be Decided? By Whom and When?
- Is a Guardian(s) Appropriate If a Divorce or Separation Occurs?
These are many important factors that parents must consider when planning their estate. Parents must ensure that their Revocable Living Trust is funded properly. This means your assets should be appropriately titled and have designated beneficiaries.