Estate Planning for Parents with Minors
August 18, 2020
Hi, everybody! Hope you’re all doing well. I did a post last week asking you guys what questions you had on estate planning and estate administration and I got a lot of feedback and I really appreciate all the questions. The one question that I wanted to address, I believe will impact a lot of you and that question came from Erica and Erica’s question was, as a single mom, what can I do to protect and secure my family’s future? And when I read that so many things popped into my head, but I’m going to focus on three things for you guys today and the three things I’m going to talk about, they apply to single parents of course, but they also apply to parents with minor children.
And the first thing I’m going to talk about is a will. Get a will you need to have a will and in that will you need to name a guardian. And for single parents this is even more important because if something would happen to you, if the other parent is deceased or incapable of raising your child you need to make sure you tell someone who you want to raise the child because otherwise the courts going to decide, and I don’t know anybody that wants the court deciding who’s going to raise their children.
So, the second thing is that you need to get a trust set up and the trust that I’m talking about setting up is not during your lifetime necessarily, it can be, but the trust I’m talking about would kick in after you pass away. And the reason that that’s important, is that first off without a trust any assets you have are going to go to your estate and because your children are minors, the courts then going to have to sort of determine what to do with that money and who should be managing it and so forth. And during that time, your kids aren’t going to have access to that money and that may affect the lifestyle of your children and the kids are already going to have lost their parent, you know, you don’t want to have their life impacted any more than it obviously already is.
So, that’s the first reason, the second reason is that by creating a trust, you’re ensuring that you’re picking someone you trust and who knows you and knows what you value and that person would then manage the money for your children while they’re still children now. Now, if you don’t select somebody, the court picks again, and again you wouldn’t necessarily select who the court selects. And the court would then dictate sort of the terms of the trust. And that’s what I’m going to get into next. So, the third reason is that person that you name is then going to have the ability to decide whether or not to give money to your children for certain things. So, the money in the trust can be used for their health, their education, their maintenance, and support, and anything else that is important to you and to your children.
So, for example, you know if you have a kid that’s really into photography and that’s their passion and that’s what they want to do with their life, you would be able to indicate in that trust, you know John loves photography make sure he has the latest cameras and anything else that he needs in order to pursue his dream. You know, it can be really creative and what’s interesting about these trusts is you actually can maintain these trusts beyond the age of eighteen, which is really important because eighteen-year-olds do not always have the best judgment. So, a lot of times we’ll see these trusts extending to ages 25 even 30 and that person just continues to manage that money for your children until you believe they would be responsible enough to have that money turned over to them. So, third thing, so we first have the wills, now we have trusts.
Third item I want to talk to you guys about is life insurance. And life insurance is important because that ensures that there is going to be money there for your children upon your death.
So, if you pass away, there’s going to be money there to be able to use for the trustee, then to be able to provide to the children for sports, extracurricular activities, whatever. Again, that you would provide to your children if you were still around. And what that allows you to do, it actually gives you a little bit of freedom to select a guardian who you believe would best raise your child and that would share your beliefs and your values with the child and you wouldn’t then have to worry about whether they have the financial capability of raising your child because you are providing this money there for your child’s benefit and so they can just be there to provide guidance and emotional support. And I think that that’s a huge factor.
So, I don’t want to overwhelm you guys, but those are a few things that I think you really ought to consider and I hope it helped. Again, I know everybody’s family is different and I would be more than happy to speak with you about yours and try and create a plan that will suit you and your family’s needs. So, please give me a call or send me an email. If you have any other questions and please keep the questions coming as well. I really had fun with this knowing that this was a question that somebody actually had versus me just sort of assuming what people want to hear. So, thank you so much and have a wonderful day.