When an estate owner passes away leaving a surviving minor child, the other parent usually becomes the minor’s guardian. However, what if both parents die simultaneously or within a short span of time before their child reaches adulthood? Or, what if one parent becomes incapable of caring for the child, and the capable parent passes away? Who will care for their minor child? Estate planning can help parents mitigate some of these significant concerns.
In a will, parents can nominate the guardian(s) of minor children in case a natural guardian is unable or not suited to serve. The will can also include an explanation for the nomination(s) and or declination(s) of guardian(s). Although, the court has the final stamp of approval, the judge can at least have guidance from the children’s parents from their will.
The court will likely respect the nomination of a guardian from a parent’s will. However, the financial issues are still left in question. If a child inherits more than $5,000, the court will have to get involved unless the parent who left the money arranged for the money to go into a trust. If a child inherits over $20,000, the court can order that the money be deposited in a blocked account with withdrawal only by a court order. When the child turns 18 years old, the previously blocked account becomes fully accessible to the child.
A living trust allows parents to design when and how their children will receive their inheritance. Parents, for example, can leave instructions for the trustee regarding the management of the trust property for the benefit of their children without court involvement.
Parents can also decide when and how children will receive trust property. Some choose to give their children their inheritance at a specific age or after achieving a certain milestone. Some prefer to stagger the distribution of the funds—for example, one-half at age 25 and the balance of the remaining property at age 30.
Parents cannot predict whether their children will squander their inheritance at age 18 or at age 30, however, they can make reasonable decisions now and plan accordingly.
The Law Offices of Belgum, Fry & Van Allen have experienced estate planning attorneys to help you and your family. Contact us today for a free consultation.Tags: living trust