If your minor children were orphaned tonight, would they be okay tomorrow? In other words, have you legally appointed back-up parents (i.e., guardians) to take your place?
A recent article in TheStreet, titled "How to Give Away Your Kids," encourages parents to take action without delay.
Unfortunatley, the article explains, some families with young children will be "frozen in place" without making a decision. It is not an easy one to make.
When drafting your will, you have the option to select two different guardians. You can have a guardian for your child or children and a guardian for the property or the estate.
In fact, they can be the same person if you want, but they need not be.
Typically, people choose two different individuals because the one who cares for the children might not be the person you would want handling their inheritance. The two-guardians approach may require separate and distinct skill sets vested in the same person.
To minimize the risk, some parents elect to keep these roles separate. In fact, the best way to do this is by creating a trust.
If both parents pass away, usually all or most of their estate will pass to their children. This should be best done via a trust, if the children are minors.
By setting up a trust, you can be very specific regarding how the funds can be used for the care of your children, to include for education funding. The guardian (i.e., the "trustee") over the inheritance can also be an institution—it need not be a person. And that guardian is not required to live with your child.
For example, you could name an older 19-year-old daughter legal guardian of a 13-year-old, but the 13-year-old could live with her grandparents while the 19-year-old is away at college.
Requesting an individual to be a guardian and to potentially “expand” their family is a significant financial obligation. Leaving enough funds to provide for the care of your minor children is another tough task. Consequently, a lot of parents spend considerable time figuring out the estimated cost of their financial objectives.
Oftentimes, parents evaluate their life expectancies and try to come to an appropriate level of life insurance and savings to provide for their minor children. Some of these parents, however, may not live to their natural life expectancies. Accordingly, make financial and legal plans as if today is "that" day.
So, if you have minor children, contact your estate planning attorney and make sure your legal plans are good to go.
Remember: “An ounce of prevention is worth a pound of cure.” When making your financial, tax and estate plans, do not go it alone. Be sure to engage competent professional counsel.
For more information about estate planning in Overland Park, KS (and throughout the rest of Kansas and Missouri) and to download free tools to help you organize your estate, visit my estate planning website.
Reference: TheStreet (July 28, 2014) "How to Give Away Your Kids"