By Angela M. Ward, Attorney
Young parents find it very hard to think about death, but once young adults have children, it is imperative that they create a plan in case of death or incapacitation to ensure that their children live with and have their assets controlled by the person of the parent’s choosing. That’s why assigning guardians and documenting wishes in a legally binding document such as a Will and Trust is so important.
Without a Will, the Court Assigns Guardianship
Many parents believe that simply asking family members to care for their children as guardians will suffice. But that is not necessarily so in the eyes of the state. Without a legal Will in place, an estate is intestate. If this happens, there could be a court hearing with next of kin and loved ones in attendance and it is up to a judge to determine who would be most able to serve as guardian.
Without a Will in place, custody arrangements are sometimes disputed, and the court may remand the children to foster care or individuals with special needs to institutional care until the guardianship is resolved.
Choosing a Guardian
In selecting a guardian, it is essential to consider where you would want your child to live and who you would want to be in control of their inheritance. It is a good idea to name one person and then another as an alternate because naming couples does not resolve the issue of who is in charge if that couple were to split up. While a couple may seem like a good choice, it’s also important to think about what happens if that couple becomes divorced. Who would you want to be the guardian, and who should be the backup?
Some parents may want to choose the child’s grandparents as guardians. In these cases, the parents should consider the grandparents’ current age, health, and energy levels. It’s also wise to keep in mind the age at the end of guardianship. For example, will grandparents be in their sixties or eighties when a child graduates from high school? What happens if a parent’s health declines as they age? Is guardianship something they want to take on in their later years?
In many Wills, parents specify a secondary guardian who may take over if the primary guardian is unable or unwilling to take on the task. This is a useful option if the primary guardian’s situation changes significantly over time, making guardianship difficult or even impossible.
In addition to choosing guardians, a Last Will and Testament can also include guidelines for guardianship. There are two types of guardians. The Guardian of the person is with whom the minor lives. The Guardian of the estate is who handles the minor’s inheritance. It is efficient to have this be the same person so that he or she simply acts as a parent who lives with the minor and distributes the minor’s inheritance as he or she sees fit.
Many parents compensate a guardian for their duties with a stipend. Additionally, amounts can be set aside to be used for the child’s care, education, or health expenses. Some parents choose to distribute inheritances to their children in phases, ensuring that the child is old enough to handle money responsibly. In all of these instances, assigning a guardian or trustee is wise to ensure the inheritance is being distributed pursuant to the parent’s wishes.
The Role of Trusts
Trusts are legal documents that manage the distributions of funds, including inheritance, 401(k)s, pensions, and/or life insurance policies. For families with children under 18 or with special needs dependents, they are a legal tool that protects against the mismanagement of an inheritance. Many trusts specify how funds can be used, distribute parts of a legacy as the heir reaches certain ages or milestones, and provide timed income or stipends for trustees and/or guardians.
Caring for Dependents with Special Needs
When planning for a child or adult with special needs, choose a guardian who can care for a child into adulthood. It’s wise to choose a guardian who knows and understands the resources that the dependent may require.
Many individuals with special needs depend on public benefits. To prevent an inheritance from affecting qualifications for those benefits, parents can set up a Special Needs Trust to hold bequests and assets. The money goes to a trust instead of an individual, so it does not disqualify a special needs beneficiary from receiving aid. An appointed trustee spends the money on the dependent’s behalf. A special needs trust is a smart way to ensure financial support without jeopardizing assistance.
Make a Legal Document
While some parents rely on family to honor personal requests, without a legal document like a Will and/or Trust in place, it is difficult to ensure that one’s selected guardian and/or trustee will take care of dependents and their assets. Ask an attorney to draw up the necessary documents to make your choice legally binding. Going and Plank is here to help. Contact us today to get started.
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