Holiday Travel: Why Parents Of Young Children Need Wills
Holiday travel time is a key time to think about what would happen if an accident hits your family. This is the prime time for traveling with young children to visit grandparents and other family members.
Most young parents don't want to even think about the possibility of death and see no need for estate planning. However, if a tragedy struck and both parents of minor children were killed, the situation left for their loved ones to deal with is extremely complicated, expensive, and emotional.
One of the most important functions of a Will is to provide for guardians of the person (actual care and custody) and of the estate (inheritance) of minor children. The Will should set up trusts to hold and administer any assets they inherit until such age as you determine they would be old enough to manage them on their own.
If the parents fail to create trusts for minor children, a court-administered guardianship will have to be opened. If there is no Will naming the guardians of the person and the estate for the children, the court will determine who serves in these roles. These have been some of the most heartbreaking experiences I've been involved in during my 40 years in law practice. It could so easily have been avoided if the parents had done proper estate planning.
The Con's Of A Court-Administered Guardianship
- Parents have no say in who is appointed guardian of their children or their estates if they failed to make a Will. It will be up to the court to pick from a list of eligible persons. Families can get into ugly contests over guardianships that pit them against each other and destroy the family.
- If trusts are not set up under a Will, a court-administered guardianship of the estate will be required for the inheritance of the minor children. Meticulous yearly accountings have to be done for money and property coming in, going out, and remaining on hand, and for the well-being of the child. Court approval has to be secured before buying and selling assets. Legal expenses in meeting all these requirements can be huge. A properly drawn Will with trusts for minor beneficiaries until they reach a responsible age can avoid almost all of this hassle and expense.
- A court-governed guardianship of the estate remains in effect only until the child turns 18. The assets must be distributed to the child at age 18, whether that is what you would have wanted or not. We all know that not all 18-year-olds are ready to be in charge of their own financial destiny. With a testamentary trust (one set up in your Will), parents can determine at what age the child receives outright distribution, be it 21, 25, 30, or 50. Parents can also specify that distributions made for education are dependent on obtaining certain grades, attendance, remaining drug-free, and the like.
- The legal and accounting expenses for administering a guardianship for children for any length of time will likely be $10,000 or more. If the child is very young when the guardianship begins, the total can run into the $30,000-$35,000 range or more. This money will have to be paid out of the guardianship estate, and the child loses the benefit of this large amount of money.
The Pro's Of A Preparing A Will To Provide For Your Minor Children
- Parents can specify in their Will who their choices (primary and alternates) for guardians for their children would be if that worst-case scenario happens and both parents are killed.
- Parents can name someone they believe is fiscally responsible as trustee for assets to be administered to their minor children. They can spell out specific guidelines for types of expenses they would approve on behalf of their children, such as private schooling, special camps or activities, and the like. The trust set up for minor children will be administered independently of court supervision unless someone questions the actions of the trustee. Yearly accountings are not required unless it is specified so in the Will.
- Parents can specify to what age any assets remain in trust for their children - anywhere from 18 to 65+ - whenever they think they would have enough maturity to manage on their own. They also can specify distributions at various different ages or life events.
- The expense of drafting a Will that includes guardianship and trust provisions for minor children is generally not more than $1,000 - $1,500. This cost compared to the outrageous expense of a court-administered guardianship should be a compelling reason enough for parents with minor children to draft a Will. Surely, most parents can budget for this reasonable expense. It will be money very well spent.
Planning ahead for worst-case scenarios for your children can be painful, but it is extremely important. If you would like to request a free initial consultation* to discuss your estate planning with Adair M. Buckner, Attorney At Law, please click below.
*(The free consultation does not cover actual review of documents or giving legal advice on a specific situation.)
** This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, specific tax, legal, or accounting advice. We can only give specific advice upon consulting directly with you and reviewing your exact situation.
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