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Estate Planning Considerations for Parents with Minor Children
As a parent with minor children, planning your estate involves certain special considerations. While it is difficult to think about not being around to watch your children grow, this is unfortunately a possibility; and, as a parent, you owe it to yourself, your children and your other loved ones to have a plan in place.
Here are five estate planning considerations that are unique to parents with minor children:
1. Holding Assets in Trust
While there are a variety of reasons to consider incorporating a trust (or multiple trusts) into your estate plan, using a trust to leave assets to minor children serves two distinct purposes. First, it ensures that the assets placed into the trust will be used to meet your children’s needs while they are still too young to make informed financial management decisions themselves. The trustee will administer the trust according to the terms you specify; and, once your children reach a certain age, then they will have access to the remaining trust principal outright.
Second, establishing a trust allows for the assets placed into the trust to appreciate as your children grow. In addition to making distributions for your children’s benefit on the terms that you specify, the trustee will also be responsible for managing (i.e. investing) the trust’s assets on behalf of your children.
2. Establishing the Terms of the Trust
When establishing a trust for your children, you will need to decide on the terms that are most appropriate. For example, what distributions will the trustee be authorized to make while your children are still minors? At what age will your children have access to the entire trust principal?
3. Planning for Incapacity
Many parents with adult children choose their children to serve as their representatives in the event of incapacity. If your children are not yet old enough to communicate your wishes and make decisions on your behalf, you will need to choose someone else to serve in this role who can make decisions with you and your children’s best interests in mind.
4. Appointing a Guardian (and a Contingent Guardian)
If you were to die or become incapacitated, who would you want to raise your children? The person you choose will become your children’s “guardian.” While it is possible to have a guardian appointed through the probate process, designating a guardian (and a contingent guardian) in your estate plan ensures that you get to decide who serves in this role.
5. Providing Financial Support for Your Chosen Guardian
In addition to placing assets in trust for their children, some parents also choose to leave a gift to their chosen guardian. This gift is typically intended to help the guardian purchase new furniture, move into a larger home and accommodate any other expenses associated with assuming fulltime caretaking responsibilities. The amount of this gift will depend on a variety of different factors, and it is yet another important decision for young parents to make during the estate planning process.
Speak With a McKinney Estate Planning Lawyer in Confidence
If you would like more information about how to incorporate protections for your minor children into your estate plan, we encourage you to get in touch. To speak with one of our experienced estate planning lawyers in confidence, please call our McKinney, TX law offices at (214) 726-1450 or request an appointment online today.