As a parent, nothing is more important than your child's well-being. But what happens to them if something unexpected happens to you? That's where estate planning comes in. By creating a plan, you can ensure that your minor child is well-cared for and that the money you leave them benefits them.
Many parents don't like to think about it, but who will care for your child if you cannot? Putting an estate plan in place can give you peace of mind and ensure your child is well protected in the event of your incapacity or death. By creating an estate plan and nominating a guardian, you're giving your child the best chance of being taken care of in case the worst happens.
So what are the steps you take? Well, the first step is to establish an estate plan where you will, among other things, name a guardian. But what about emergencies? It's important to have a plan in place for those too. You can use a document to temporarily delegate parental authority in case you're unable to act, whether it's due to an illness, disability, or absence (such as a trip). Remember that this document only lasts for a short period (usually six months) and can only be used for certain situations but is essential as part of your overall plan
How do you nominate a guardian?
Choosing a guardian to care for your child after your death is a big decision. So how can you ensure your child is in trusted hands? Here are some options to consider.
First, you can name someone in your last will and testament. This legal document allows you to name a guardian for your child and choose a person to handle your affairs and distribute your assets.
If you have a trust, you can use a "pour-over" will ensure any assets that go through probate are directed to your trust. This can also include naming a guardian for your child.
Alternatively, some states offer a separate document specifically for choosing a guardian. This option allows you to revise your choice without updating your entire will.
Remember, the best choice for a guardian is someone who shares your values and beliefs and who you trust to care for your child in the event of the unthinkable.
How do you name someone to step in when emergencies arise?
An estate plan often centers on planning for the inevitability of death. However, preparing for life situations but also addressing incapacity requires someone else to make important decisions on your behalf, such as caring for your child. This document allows delegation of parental authority and can be utilized even when traveling. It is important to bear in mind that this document holds only short-term effectiveness (frequently six months in some states),
Rules for Your Child's Inheritance
Who will be in charge?
When it comes to financial affairs, minors cannot handle it without an adult's help unless they are emancipated. Moreover, in the event of your demise without a will or trust, the other legal parent will manage the property and money left for your child. If they are unable to do so, the court will appoint someone. However, with a will and proper planning, you can designate the person you choose to control the money and property.
When and how will your child receive their inheritance?
If you do not have a will in place, you are relying on your state's inheritance laws which will govern how your inheritance shall be managed. Typically this is held for your child until they come of age, after which they will receive your estate. Even though your child would become a legal adult, they may not be ready for a flood of money and assets and may not use them in the ways you'd want them to. This is where trust comes in handy. You can issue instructions for how you want the inheritance spent through a trust. A revocable trust can be set up, or your will can include these notes (a testamentary trust). Trusts are invaluable when it comes to single parents, as trust can be used to protect the child from others and him or herself.
Many options are available when crafting instructions for how your child's inheritance should be managed and distributed. Your minor child can receive a percentage upon reaching a specific age (e.g., 50 percent at thirty years old and the remainder at fifty). You can also structure your child's trust as an incentive to allow the trustee to give them money only after they meet specific goals (e.g., successfully completing postsecondary education and being sober for one year). Alternatively, you can leave the decision of how and when to give out the funds exclusively to the trustee's discretion. This is sometimes referred to as a discretionary trust. Because your child will not be guaranteed a specific amount of money or piece of property, the funds will be better protected from any future creditors or divorcing spouses that your child may have.
When considering who to select as the trustee of your minor child's trust, you can choose a family member who knows your child and understands your wishes. If you do not have family that you would like to fill this role, you can look to your close friends. These people may already be a large part of your child's life and may understand your wishes. Lastly, if you do not have someone you would want to serve as a trustee, you can hire a professional trustee, though be aware that professional trustees charge for their services. While all trustees are entitled to compensation, a professional trustee may be more expensive and have set fees.
Although state law will provide your child with a guardian, someone to manage their inheritance, and a distribution plan for their legacy, this is the least desirable result.
You have the power to design an estate plan unique to your child's circumstances and your wishes. By doing so, you appoint those individuals you trust. We welcome the opportunity to help you create the best plan for you and your child or to update your existing plan. Feel free to book a call with us to schedule an appointment.
Yonkers Office (By Appointment Only)
Garden City Office (By Appointment Only)
