Estate Planning for Minor Children
Legal Guidance for Selecting a Guardian and Trustee
One way or another, the question of what happens to your minor child, without you and the other parent will be answered. How much control you have over that answer is up to you. The Andersen Firm knows that most people have no idea how or where to start to answer this question, so our attorneys are here to help you with planning for the unexpected by selecting a guardian and trustee.
The thought of someone else raising your child is nearly incomprehensible, and we know it is the most difficult of decisions you will face as a parent. But, with no planning, or without proper planning, the care of what is most valuable to you will be decided by the judicial system. Wouldn’t you rather select who will take care of your child yourself?
There are two critical choices you should make for your minor children in the event of your incapacity or death. 1)Guardianship, or who will take care of my minor children? 2) Trusteeship, or who will manage my children’s inheritance?
Naming a Guardian for Your Child
If you are separated, divorced, or never married to the surviving biological parent of your shared minor children, then that parent will continue to be their guardian, absent a court-proven case of unfitness. Nevertheless, you will want to make prudent choices regarding guardianship should your minor children be orphaned.
While every family situation is unique, here are some things to consider when selecting guardians for your minor children:
- Consider guardians who will maintain the most consistency and cause the least amount of disruption in their day to day lives;
- Select guardians who reflect your parenting style the most. Those who share your faith, values and life priorities; and already have an established positive relationship with your minor children;
- Consider who has the capacity to handle raising your children. Ask yourself, “Do they already have their hands full with their own children?” “Are they young enough to keep up with my children?”;
- Consider, when selecting a married family member, appointing the family member only, in case your family member predeceases or they divorce;
- Make sure your legal plans provide for the compensation of the guardians, or at least that the inheritance is available to cover all legitimate expenses incurred when rearing your minor children; and
- Talk with the guardians you choose before appointing them in your estate plan.
Naming a Trustee for Your Child
In addition to selecting a guardian, choosing a trustee is also requires great care when deciding. You can consider this person the treasurer of your child’s estate.
This will be the person responsible for managing your child’s inheritance and deciding how the inheritance should be spent. The easy and sometimes obvious choice is to name the guardian; however, this is not always the best choice. What if you and the other biological parent are divorced or were never married? Even though he or she may rear your minor child or children to adulthood, would you also want them to control the inheritance you leave behind, too?
And remember, that while a guardian is legally necessary until your child is 18, the trustee will serve until the child has reached an age you determine they will be financially responsible. This can be age 30, 40, or in special needs circumstances, maybe never. Therefore, you will want to name successor trustees in case your first choice can no longer serve.
With each decision for trustees, there are unique advantages and disadvantages.
The most common choice is to appoint trusted family members or friends. On the upside, they likely know the strengths and weaknesses of your loved ones, plus they may not charge much, if anything, to oversee the inheritance. On the downside, they may be busy with and distracted by their own life and financial responsibilities. Also, they may find it difficult to say “no” to an irresponsible heir.
The most controlling choice is to appoint a professional fiduciary, or a corporate trustee such as an institution (e.g., a trust company) or an individual (e.g., your CPA). Interestingly, the upsides and downsides are the opposite of the most common choice above.
The meet-in-the-middle choice can be the best of both worlds. By appointing co-trustees (a family member and a corporate trustee), you can combine the family appointee who knows the strengths and weakness, and provide them with an “abominable no-man” to help preserve family relationships when the minor child asks for a Ferrari, and is not bogged down with investments, accounting, tax and legal details. Instead, the corporate trustee shoulders (and is rightfully compensated for) the day-to-day management of the inheritance, playing the heavy when necessary.
As you can see, selecting guardians and trustees is essential for the physical and financial well-being of your minor children. Few decisions in life are more important. By undertaking these emotional decisions now and forming a thoughtful and durable estate plan, you will ensure that your children are provided for, no matter what lies ahead.