Quit Setting Your Money On Fire

Consider Your Offspring When Estate Planning

by Kathryn Watson

You might think that a life insurance policy and a last will and testament are all that is necessary to plan an estate. While those two things are a good start, a comprehensive estate plan goes a lot further. It's safe to say that most estate plans revolve around financial issues, but there are a few very important aspects that take another approach. Read on for some ideas about taking care of your parental responsibilities with estate planning.

For Younger Children

You can, and should, address the needs of any adult (aged 18+) children using a will and, better still, a trust. Younger children, however, are not able to receive an inheritance in a straightforward manner. Most commonly, the financial side of this issue can be addressed using a trust and appointing a trustee to administer the money until the child reaches their majority. Money can be set aside for them in several ways, but you must appoint a trusted person to oversee the funds. If you live with the other parent of your child, they will automatically get full custody of the child after your death. You do not, however, have to appoint that same person to be the trustee of an inheritance for the child.

Appointing a Guardian

If you are divorced and you are not happy with the prospect of your ex becoming the custodial parent of your child, you must make alternate arrangements. Most of the time, the laws of the state will automatically assign custody to a biological parent even if that parent did not previously have custody. It's vital that you take things a step further than designating a guardian, however. To override the laws of the state, you must show good reasons for not allowing the biological parent to care for the child after your death. Since you won't be around to explain your reasons, make them part of the guardianship paperwork. For example, you might include police reports, child study reports, and child custody court proceedings to address this matter.

Guardian Considerations

To make things go as smoothly as possible, take the following steps:

  1. Be sure the potential guardian knows about and accepts the role beforehand.
  2. Depending on their age, your child might want to have input in the choice.
  3. Be sure to revisit your plans at least yearly and make changes as needed. You don't want to appoint a guardian whose health has worsened, died, or may no longer be appropriate for your needs.

To find out more about children and estate planning, speak to an attorney.