Special Considerations for Estate Planning with Minor Children
As children under the age of 18 cannot legally own assets independently, parents with minor children must make certain changes to their estate planning.
There are now about 63.1 million parents with children under the ages of 18 across the US. If you have minor kids, it’s important to start planning your estate. Many parents are concerned about ensuring their children are well taken care of, including establishing trusts, guardianship, and managing their inheritance. Otherwise, you might not have plans in place if anything ever happens to you.
Planning your estate now will ensure your children are well taken care of. After all, planning for your child’s future is part of being a parent. Beginning the estate planning process can help you get your affairs in order.
Not sure where to start? Here’s everything you need to know about minor children estate planning.
After reading this guide, you can make informed choices with your family in mind. Read on to learn more about estate planning today.
What is Estate Planning?
The COVID-19 pandemic increased people’s desire to get a will by 35%. Unfortunately, two out of three people still don’t have essential estate planning documents in order. What’s involved with the estate planning process, exactly?
Estate planning isn’t as complex as people might believe. It’s the process of determining factors of your life that someone else will handle when you’re no longer able. You can ensure everything is handled according to your wishes.
Estate planning documents can cover who will handle your medical or financial decisions when you’re unable. It can also outline your specifications in these circumstances.
These documents can also determine what will happen to your bank accounts, home, and belongings when you pass on. Additionally, trusts can be used to manage estate assets for minors, ensuring their financial security and proper management until they come of age.
Estate Planning as a Parent
Life changes when you become a parent. Your estate planning needs to change when you have minor kids, too.
Most parents don’t pass on until their children are into adulthood. Unfortunately, you can’t anticipate events that could change those circumstances. If you die and leave minor children behind, your estate documents can outline your wishes.
Minor children are under the age of 18 and therefore can’t make decisions about legal documents. They also can’t make decisions regarding property, including:
- Bank accounts
- Real estate
- Debts
- Inheritance
- Assets
- Life Insurance
- Retirement Accounts
Creating a trust or will for your children will outline your wishes and requirements if anything happens to you. Managing trust assets is crucial for ensuring the financial well-being of minor children and protecting their inheritance.
It’s important to hire an estate planning professional as you begin estate planning. They’ll help you navigate the steps involved throughout the estate planning process.
Considerations
Every family situation has its own unique set of circumstances. With that in mind, everyone’s estate planning process is a little different. However, there are a few essential matters you might want to discuss with a lawyer or spouse.
Here are a few considerations to keep in mind while planning your estate if you have minor children.
Potential Guardians
What will your child’s life look like if you’re no longer able to take care of them? You might want to consider which family member will become their physical and legal guardian. For example, you might want to choose a:
- Grandparent
- Older siblings
- Aunt or uncle
Determine who you trust to care for your child when you’re no longer able.
Power of Attorney
In some cases, you can become unable to make your own medical and financial decisions. During these situations, someone with a power of attorney will step in. You can decide who will make these decisions for you.
In some cases, their power of attorney is only temporary. For example, you could fall into a coma after an accident. In that case a Living Will is also important.
A medical power of attorney gives an individual the ability to make any necessary medical decisions. Financial power of attorney gives them control over managing finances.
You can give one of your adult children power of attorney. However, you can’t give this power to minor children.
Assets
Make note of the assets you intend to leave your beneficiaries.
Specifying how you want things handled when you are unable will ensure everything remains orderly and amicable. Otherwise, there could be problems when it’s time to divide assets and settle debts.
An Executor
An executor will make decisions related to your financial assets, personal property, and real property. You might choose the same person as both your executor and children’s guardian.
Your executor will manage the assets of your estate. They’re responsible for distributing assets to your beneficiaries.
Inheritance Ages
Your children can’t officially inherit assets from your estate until they’re 18. In some cases, the age of inheritance is delayed or staggered, too. You can decide what ages they’ll receive part or all of their inheritance.
Start Planning
Don’t want to start planning your estate. Instead, contact an estate planning attorney right away.
You can start by creating your will. You’ll name your power of attorney. You can also appoint an executor or guardian for your minor kids.
You’ll state your wishes regarding your assets within your will, too.
Talk to your estate planning attorney about any state-specific inheritance or tax laws. You might need to consider these laws when outlining your will. In these instances, you’ll also need to use state-specific estate planning documents.
Remember, consulting an estate planning attorney can streamline the entire process.
Create your trust as well. If you don’t want to give beneficiaries assets directly, you can place them in a trust.
You’ll use different types of trusts for money, stocks, real estate, or other pieces of inheritance.
For minor children, you can create a family pot trust or children’s trust. These trusts allow for education and medical expenses if your children require them.
You might also consider a spendthrift or irrevocable trust for your child to inherit once they turn 18.
Working with an estate planner will ensure you customize these documents based on your distinct needs.
Estate Planning With Minor Kids: Get Your Documents in Order Today
Don't wait until the last minute to begin estate planning. Instead, talk to a professional about estate planning with minor kids. Your estate planning attorney will ensure the proper documents are in order.
With their help, you can secure the future for your children.
Interested in getting started? We're here to help.
Contact Citadel Law Firm PLLC team today to schedule your free consultation, click here or call (480)565-8020.
Frequently asked question about minor children estate planning.
Should you put minor children as beneficiaries in your estate planning?
Yes, you should include minor children as beneficiaries in your estate planning, but it’s important to do so through a trust. Since children under 18 cannot legally own assets independently, creating a trust ensures that their inheritance is managed and distributed according to your wishes until they reach an appropriate age. Additionally, setting up a trust as a beneficiary for the life insurance policy ensures the proper handling and distribution of life insurance proceeds for minor children.
A family pot trust or children’s trust can cover essential expenses like education and medical care, providing for your children’s needs while safeguarding their future. Consulting an experienced estate planning attorney in Arizona can help you set up the right trust to protect your minor children.
What is an important component of an estate plan that all people with minor children need to complete?
An essential component of an estate plan for all parents with minor children is the establishment of guardianship provisions. This aspect ensures that if something were to happen to both parents, a designated guardian would step in to care for the children. Choosing a guardian involves careful consideration of factors such as the guardian’s ability to provide emotional and financial support, their parenting style alignment with your own values, and their willingness to take on the responsibility. It’s crucial to discuss this decision with the prospective guardian beforehand to ensure their willingness and suitability for the role.
For families with very young children, it is particularly important to consider guardianship and financial management to ensure their well-being and stability. Additionally, setting up a trust is another critical component of estate planning for parents with minor children. A trust allows you to designate how and when your assets will be distributed to your children, ensuring that they are used for their benefit and are managed responsibly until they reach adulthood. By establishing a trust, you can specify conditions under which funds can be accessed, such as for education or medical expenses, and appoint a trustee to oversee these distributions according to your wishes. This approach provides greater control and protection over your assets, safeguarding your children’s financial future in the event of your untimely passing. How to ensure your kids inherit what you leave?
How to add a Guardian Designation for your minor children?
Adding a guardian designation for your minor children is a crucial aspect of estate planning, ensuring their care and well-being if something were to happen to you. To begin, consult with an estate planning lawyer who can guide you through the process. They will help you draft legal documents, such as your will or a separate guardian designation document, that clearly outline your preferences for who should care for your children in your absence.
Firstly, discuss with your attorney the qualities and values you seek in a guardian. Consider factors such as their relationship with your children, their parenting style, financial stability, and willingness to take on the responsibility. It’s essential to choose someone who shares your values and whom you trust implicitly.
Secondly, specify your guardian designation clearly in your will. This document should clearly outline who you wish to appoint as the guardian of your minor children. Be sure to include alternate guardians in case your primary choice is unable or unwilling to fulfill the role. Your attorney will ensure that these provisions comply with state laws and are legally enforceable.
Additionally, review and update your guardian designation periodically, especially if circumstances change such as a change in your guardian’s situation or if your children’s needs evolve. This ensures that your estate plan remains current and aligned with your wishes. Taking these steps not only provides peace of mind but also ensures that your children are cared for by someone you trust in the event of unforeseen circumstances.
What is a Temporary Guardianship for your minor child?
Temporary guardianship for minor children is a legal arrangement that allows someone other than the child's parent or permanent guardian to care for them for a limited period. This arrangement is crucial in situations where the parents may be temporarily unable to care for their children due to illness, travel, military deployment, or other unforeseen circumstances. It provides a legal framework for ensuring that the children's daily needs, medical care, education, and other essential aspects of their lives are managed by a designated guardian during the parents' absence.
To establish temporary guardianship, parents typically need to draft and sign legal documents that designate the temporary guardian and outline the scope of their responsibilities. These documents should be notarized and comply with state laws to ensure they are legally binding. It's advisable to work with an estate planning lawyer to create these documents properly, as they can vary by jurisdiction.
Temporary guardianship can be granted for a specific period, such as during a parent's medical treatment or overseas assignment, and can specify the powers and limitations of the temporary guardian. This arrangement provides peace of mind to parents, knowing that their children will be cared for according to their wishes and best interests during temporary absences. It's important to review and update temporary guardianship arrangements as needed, especially if circumstances change or the designated guardian's availability or suitability evolves over time.
When you work with Citadel Law Firm PLLC, we provide you with a template for establishing temporary guardianship. It is crucial to have such documentation in place, especially when you are traveling and your child will be under the care of someone else.
Why is it necessary to establish a Trust with Special Needs provisions?
Establishing a Trust with Special Needs provisions is crucial to ensure the ongoing care and financial security of individuals with special needs. Unlike standard trusts, which may jeopardize eligibility for government benefits like Medicaid and Supplemental Security Income (SSI), a Special Needs Trust (SNT) is designed to supplement rather than replace these benefits. This legal arrangement allows individuals with disabilities to receive financial support without affecting their eligibility for essential public assistance programs.
Moreover, a Special Needs Trust provides a structured way to manage assets on behalf of a person with disabilities who may not have the capacity to handle their finances independently. It ensures that funds are used appropriately to enhance their quality of life, covering expenses such as medical care, therapies, education, housing, and recreational activities that government benefits may not fully address. By appointing a trustworthy trustee to oversee the trust, families can have peace of mind knowing that their loved one's financial future is secure and their needs will be met over the long term. This proactive approach safeguards against financial mismanagement and ensures that individuals with special needs can maintain a dignified and supported life.
Establishing a Trust with Special Needs provisions is essential not only for individuals currently living with disabilities but also for families whose children may face unforeseen challenges in the future, particularly if they are young. While your children may not have special needs now, circumstances can change unexpectedly due to accidents, illnesses, or other life-altering events. By setting up a Special Needs Trust early on, you create a protective framework that can adapt to future needs, ensuring that financial resources are available if and when they are needed. This proactive approach provides flexibility and peace of mind, allowing families to focus on their loved ones' well-being without the added concern of financial uncertainty in times of crisis or transition.
At Citadel Law Firm PLLC, all our trusts are tailored to meet your family's specific needs. We ensure that special needs provisions are included in your trust if they are relevant to your situation, and this service comes at no extra cost.
