For parents of minor children, estate planning is about far more than simply signing a will. A major objective is to ensure that, if the unexpected happens, your children are cared for by the appropriate people and that the assets for their support are managed responsibly until such time that the children are mature enough to manage the assets by themselves.
Most parents understand that a will allows them to nominate a guardian to raise any minor children, if necessary. Without that nomination, a court will decide who raises your children if both parents pass away. While courts do their best to honor family wishes, the absence of clear instructions can create uncertainty or even conflict among relatives during an already difficult time.
One commonly overlooked issue is the management of the assets left to those children. If minor children inherit assets outright, the law typically requires a court-supervised guardianship of the estate until the child reaches age 18.
The guardianship process itself can also be more burdensome than families expect. A guardian of the estate must typically be formally appointed by the probate court, post a bond in certain circumstances, and comply with ongoing reporting requirements. This often includes preparing an inventory of the child’s assets, filing periodic accounts with the court, and seeking court approval for certain expenditures. While these safeguards are intended to protect the minor’s property, they can create administrative costs, delays, and public disclosure of financial information. In addition, the funds generally must be turned over to the child outright when they reach age 18, regardless of maturity or financial readiness. For many families, the idea of an 18-year-old suddenly receiving full control of significant assets is less than ideal.
This is where thoughtful planning makes a difference. By incorporating trusts into an estate plan, parents can ensure that funds are managed by a trusted individual for the benefit of their children. The trustee can use those funds for a child’s health, education, maintenance and support while the children are growing up. This structure ensures prudent investment and distribution of the assets, while remaining private to avoid the costs and delays associated with formal guardianship. Eventually, or upon certain terms and conditions, control over the assets can be given directly to the children, where they would no longer have to work with the third-party trustee to receive distributions of their inheritance.
Trusts can also help families avoid unnecessary probate complications and provide continuity in financial management if a parent becomes incapacitated. Paired with properly executed powers of attorney and health care directives, these tools ensure that someone you trust can step in to manage finances and make medical decisions if needed.
Estate planning for parents is ultimately about creating a framework that protects both your children and the assets intended for their benefit. With the right planning, you can provide stability, guidance, and financial protection—even if you are not there to do it yourself.
Contact the attorneys at Cavitch Familo & Durkin today to begin planning for your family’s future.