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Building wealth is only half the job. Protecting wealth for your loved ones and yourself is equally important. Through estate planning our firm will help you protect everything, you love — family, friends, and favorite charities. For more information be sure to visit our website where you will have access to our blog, events schedule, and a complimentary newsletter subscription!
How to Protect Your Minor Children
The need to protect each minor child begins the moment he or she is welcomed into the family. Planning for the future of your minor child is an essential responsibility that only you can exercise. Without an estate plan, the entire life of your orphaned minor child would be turned upside down. It will be filled with probate court proceedings, lawyers and a traumatic life enmeshed in court proceedings regarding guardianship and finances.
Who will raise your children? Name a guardian in your last will.
If the parents do not have a last will and do not nominate a guardian, the court will decide who will raise the children. In that case, a favorite grandparent, aunt, or uncle is not an automatic choice. Anyone can apply to be a guardian and the court will decide. In the case of a divorce, the court may or may not name the ex-spouse, depending upon the circumstances.
A last will is an easy way for parents to identify their preferred guardian for their children.
Deciding who should be their guardian.
The guardian should share your family’s values and views on raising children. If possible, it would be ideal if they could care for the children without needing to move to a new school district or community. If the house is left to the guardian, this is more likely to occur. Grandparents are not always physically able to care for or keep up with active young children. Therefore, it is important to be realistic about the age and lifestyle of any guardian candidate when making this decision.
How to protect the minor child’s inheritance?
A second person who is financially sophisticated and trustworthy may be named to oversee the child’s finances. The life insurance proceeds left by parents often total hundreds of thousands of dollars. There will also likely be retirement accounts and additional monies if the family home is sold.
Nominating one person to be the guardian and the financial guardian could make caring for the child easier. However, if there is no one person suited to both tasks, then two individuals may be needed. Try to select people who will be able to work together for the benefit of the child for an extended period of time.
Specify how the funds are to be used while the child is a minor and consider how much discretion you want to give to the financial fiduciary. If there is enough money, set aside a certain percentage for college.
Unless you want your child to receive a full inheritance upon reaching legal adulthood (age 18 in most states), a trust can be used to hold assets and distribute them at certain ages or milestones.
How can you try to make the child’s life a little easier?
A letter of instructions will help your child and their guardian. It will not be legally binding but would be valuable in its own right. Include your wishes for your child and their future, as well as day-to-day details about their preferences for food, activities, bedtime rituals, and religious upbringing. Revise the letter on the child’s birthday to keep it up to date. Share the letter with their potential guardian, unless you see their potential guardian on a regular basis, and they know your child very well.
These are difficult issues to consider when creating your estate plan, but tackling them will provide a better future for your minor child if tragedy strikes.
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