The common misconception is that estate planning is only necessary for people who are wealthy or old. But that’s far from the truth.
Estate planning is for everyone – no matter your age or income.
One of the most important groups of people when it comes to estate planning is parents with young children.
If you are a parent with a minor child or children, what would happen to them if tragedy struck you? Worse yet, what would happen to them if something happened to both parents? If we learned anything during this last year of pandemic, it is that anything can happen to anyone at any time.
While we all hope to be around to see our children grow and become parents themselves, the future is out of our control.
However, there are some things you can be doing now to protect the future for your minor children. That includes estate planning.
The first step is to name a personal guardian for your children in your will. Many parents think about who will take care of their children if something should happen to them. You may even have had a conversation with friends or relatives about who should fill that role. In Florida though, the only way to make that happen legally is to name the guardian in your will.
When there are two parents, each of you should have your own will. In that document, you name each other as the guardian. You should also include a back-up if a tragedy should occur to both of you.
While it is common to name grandparents as guardians, you should consider the age of the grandparents and the children before making that decision. If the grandparents are aging, will they be physically able to care for young children?
If both parents pass away while their children are under 18, the court must appoint a guardian. Rather than leave your child’s potential guardian up to chance, you can indicate in your estate plan your preference of the individual who will have legal responsibility for your child’s person and property.
In addition, until a child is eighteen years old, they can’t inherit property in their own name. Even if there is not a great deal of wealth involved, your estate plan should include how any assets they may inherit should be handled. Often the easiest way to do this is to have your will create a trust at your death to hold any inheritance. The person you designate to control that trust – the trustee – can, but does not have to be, the same person you designated as guardian.
A Trust can include provisions for how, when, and under what conditions any inheritance should be released to the children. There may be some concern about whether the child or children can be responsible enough to receive all of the money at once when they turn 18.
If there are multiple children, another consideration is what their different needs might be. For one reason or another, a child’s needs may not be the same as his siblings. That can be addressed by drafting a common, or “pot” trust. You would add a clause in your will calling for a pot trust, which can provide for the trustee to have the ability to disperse money based on individual needs.
Children under 18 should not be named directly as the beneficiary of life insurance or a retirement plan. If they are, the court will create a guardianship, select the guardian, and the money will be released to the child at age 18.
It is essential that parents of minor children not ignore this issue. Tragedy can come at any time, and even if you don’t feel like you have much of an estate, the tragedy itself may change those circumstances.
If you have minor children, you should seek the input of a qualified estate planning attorney. We would be happy to meet with you and offer guidance and direction.