By: Ryan C. Young
Richmond, VA | Estate Planning
Every single parent needs to ask themselves “what would happen to my child tomorrow if I died?” There are two fundamental concerns that must be adressed: 1) Who will manage the money for my child’s care, rearing and education? How will that money be managed? and 2) Who will make parental decisions for my child?
Obviously, this is not something that we like to think about. However, as a parent myself, I assure you that we MUST think about this. I would want my child’s life to be as smooth as possible if I were to pass away while she is a minor.
Management of Money | Estate Planning for a Minor Child
I would strongly advise that you use a trust to handle the money which goes to your child. This can be done either through a Living Trust or a Testamentary Trust contained in a Last Will and Testament. If you do not know the difference, I would be happy to explain these to you.
I prefer a trust because it ensures that the money is set aside and invested for the benefit of my child. A trust can state objectives and determine the point at which a child receives a lump sum payment (for example, age 25). Also, I have more control over how that money is spent on behalf of my child.
In a trust scenario, the trustee pays a check for the care of your child. The trustee can be someone close to you or a professional trust company. This is something you should consider as the person you choose should be someone you trust implicitly.
Choice of a Guardian for a Minor Child
This is the person who will try to fill your role as a parent if you pass away. It does not have to be the same person who is managing your child’s assets. A guardian is typically only necessary where both parents of the child are deceased. If you do not name a proposed guardian, you could end up in a situation where there is litigation over the matter. Obviously, prolonged legal battles will be even more stressful for your child at a time when their lives are turned upside down. Remember, your choice of guardian can change with time. Also, no one can be compelled to act as a guardian, so you should discuss this matter in advance with the proposed guardian.
It’s important to take action.
This subject makes many people queasy and some simply bury their head in the sand rather than make a decision. The most important thing is that you begin taking steps to develop a plan. You must remember that you never can have 100% clarity when making these types of decisions. You need to just do the best you can. Remember, you can almost always amend your estate planning documents.
Contact me today and I would welcome the opportunity to discuss your particular concerns. For me, a great deal of estate planning deals with familiar relationships and the comfort of your family members.