Well, it’s that time of year again, when you get to send your kids back to school. Hopefully, there won’t be any more lockdowns, and kids will be able to get an education as normal, even though they’ll likely be wearing masks. It’s been quite a ride these past eighteen months, and most parents are excited that they’ll get a break.
With the back-to-school season approaching, are your affairs in order? Parents with minor children face a specific set of considerations when they’re estate planning. In this article, we’ll discuss some must-have documents for those estate planning with kids.
No Wealth Required
If you’re a young couple with kids, you’re usually nearer to the beginning of your career than the end. Young couples don’t usually have an estate large enough that they’re concerned about the estate tax. However, just because your estate plan won’t revolve around tax minimization, that doesn’t mean you can neglect to create one.
An estate plan usually refers to an advanced medical directive, power of attorney, and will. However, parents with kids must think about what will happen to their children if they both die. Though it is unlikely, and there’s no reason to feel doom and gloom when devising your estate plan, it’s important to have one in case the worst possible situation happens.
Guardianship
Children under eighteen are required to have a legal guardian. If their parents are alive, one or both parents are the kids’ legal guardian(s). However, if neither parent is in the picture, guardianship becomes a little trickier. In your estate plan, you can lay out documentation that designates your kids’ guardian in the event that you and your spouse pass away.
Naming a guardian in your will is the best evidence of which individual the parents want to make decisions for their kids. Parents should take into account the guardian’s beliefs, lifestyle, financial situation, and proximity to the kids’ current place of residence. Both parents should name the same guardian in the will to avoid confusion. Guardianship is a major responsibility, and you should talk to your proposed guardian to ensure they’re on board with caring for your children in the event of your death.
Transfer of Assets
If there is no estate plan and both parents die, the child inherits their share of the parents’ estate, though said estate is held in a minor account. The child can access the money by requesting distribution from the guardian, who in turn must then contact the court for permission to remove the assets from the account.
However, if parents do have an estate plan, they can make things easier for their kid(s). They can create a trust to hold the assets, naming a trustee to manage the trust and distribute assets to the child as they want. A trust in an estate plan is a far better asset-distributor than what your kids will get if you die intestate. An estate planning attorney will help you devise a trust or something similar, making sure your child is taken care of, even if you’re gone.
Administration of the Estate
If both parents die, a successor executor will oversee the administration of the estate. Usually, a surviving spouse is the executor of the will, but, if there is no surviving spouse, someone who is over eighteen must take that spot. This person will be responsible for handling, liquidating, selling, and/or distributing the assets under the terms of the will. Each spouse can name their own executor and co-executors when creating an estate plan. Naming an executor is just another detail that will ensure your kids’ assets are kept safe and distributed fairly.
Contact the attorneys at WFP to learn more about the specific considerations that parents face when arranging their affairs.