10 . How do I protect my minor children?

If you have minor children, you must consider two questions:

  • Who will raise your children, acting in a parental role, until they reach age 18? This will be the “guardian of the person” for your children.
  • Who will manage money and other assets, make investment decisions, and make distributions to, or for, my children until the reach age 18, or even a later age? This will be the “guardian of the estate” and the “trustee” for your children.

When we are working with a client who has one or more minor children, we discuss both of these questions, as they are both extremely important and should be carefully considered by the parent(s).

When choosing a guardian of the person for your children, you will want to choose a family member, or close friend, who will take in your children, raise them, and act as their parent until they reach age 18. While it is often very difficult to decide who this would be, the alternative of not choosing anyone is worse.  If you fail to name a guardian in a properly prepared and executed Will, your children may end up at the center of expensive family court battles, resulting in further emotional turmoil and loss of funds that could be better used for them.

If you have minor children, it is not a good idea to leave any assets outright to them, whether by way of your Will, Living Trust, as a beneficiary on any life insurance policy, or retirement accounts. If any assets are left to a minor, an adult will need to petition the court to be appointed as guardian of the estate for the minor child. This is a costly process and one that results in the guardianship court overseeing every investment and expenditure made on behalf of the child.  Additionally, the child takes control of the assets at age 18. If the assets are of significant value, this may not be a good result.

A better option is to create a trust for your children, which can be done in your Will, or better yet, in your Living Trust.  The trust or trusts for your children can then be designated as the beneficiary of all assets that you want to go to your children.  You can choose who will be the in charge of the trust, called the trustee, and for what purposes the trustee may make distributions to, or for the benefit of, your children. You can also provide for the age, or ages, at which you would like your children to be able to withdraw assets from their trust.  These ages may be older than 18, which will protect the assets until the child is older and more financially responsible.  The trustee could be a trusted family member or friend, or possibly a professional trustee, like a bank or trust company.

Your children’s guardian may or may not be the same as the trustee of their trusts.  At Navigant, an estate planning attorney will walk you through these very tough decisions so that you can make choices that will best protect your children if you are not around to protect them yourself.