There are myriad reasons why a person might want to have an estate plan in place. It can range from wanting to specify the end of life instructions such as medical decisions and burial choices to the distribution of property. But for many people, caring for their children is the biggest priority, and rightly so. Without sufficient provisions in the form of finance and other needs, children can be left adrift and in dire situations after the death of their parents.
However, just as there are several reasons for wanting to have an estate plan, the specifics of such a plan and the documents used to create them will differ based on the specifics of your situation. That is why it is crucial to get advice from competent and experienced estate planning attorneys beforehand.
Why It is Important to Have an Estate Plan for Kids
When properly prepared and executed, an estate plan will ensure that your children are able to move on with life and be well provided for in the unfortunate event of death or incapacitation.
Adult Guardianship and Care
The first way an estate plan helps is by ensuring that your children have someone who is directly responsible for caring for them. This person is referred to as a legal guardian and will be responsible for making decisions on behalf of the children till they attain the age of majority. The selection of this person is usually done in the parents’ wills, but where neither parent appoints someone to be the legal guardian for their children in their will, the government will make that decision based on the particulars of the situation.
Obviously, it is better to make that decision by oneself instead of leaving it to officials who might not have a deep understanding of the individuals in question and the kids themselves. Hence, it is generally advisable to make the decision early on. Keep in mind that you can change it whenever you deem it necessary. In choosing a guardian, be sure to consider the relationship the person has with your kids as well as the capacity of the person to care for your children and make decisions on your behalf. If done right, a legal guardian would be a huge boon to your children as they grow into adulthood.
Financial Management
Financial Management is the second area where estate plans are crucial for kids. Generally, children are not the best decision-makers when it comes to when, how, and what to spend money on, and as you can imagine, children in grief after recently losing their parents would likely be in an even worse position from which to make financial decisions.
An estate plan gives you the opportunity to cater to your children’s finances in many ways. First, as mentioned earlier, having a legal guardian who is competent to handle their financial issues will likely lead to better money decisions. If you do not deem that to be sufficient, you can also create trusts which would be separate legal entities managed by a trustee of your choosing.
Trusts come with several implied restrictions regarding the actions the trustee can take, but you can also give specific instructions to ensure that your children are able to get the most benefit from the arrangement until they attain the age of majority and are able to take full control of the property.
Conflict Avoidance
Money is a very touchy subject, and many families have been torn to shreds due to disputes over inheritance. Most of those disputes come about when there is no will and the beneficiaries (your children/dependents and others whom you name in your will to receive shares of your property) are trying to get larger shares.
When there is a will, trusts, powers of attorney or other types of estate planning tools in place, such conflict can be avoided completely or at least brought to the minimum since your wishes will be clear and all your personal representatives have to do is to implement the instructions you’ve given.
To maximize this benefit, you must ensure that your will and other estate planning documents are as clear as possible. This means that you should stipulate how you want all of your property to be distributed, from the large ones (real estate, cars, stock, and others) to small ones such as electronic devices and even the crockery you inherited from your grandmother.
Special Circumstances
To be sure that you are providing adequately for children from a previous marriage, specific arrangements must be made in your estate plan. There are a few ways to do this but two of the more common are legal structures which are known as bypass trusts and QTIP (Qualified Terminable Interest Property) trusts. Minus all the legalese, the key point to note is that you can use them to provide for your spouse and children from your current marriage while also making proper provisions for children from previous marriages. Ultimately, the decision of which particular method to opt for should only be taken after getting legal guidance from experienced attorneys.
Special needs children will also need to have special provisions inserted into your estate plan, to cater to their unique circumstances. This is because unlike children who come of age legally and are thus fully capable of handling their own affairs, a child with special needs might still need to be cared for even after attaining majority. Life insurance is one of the options that can be used to provide for them, and other tools such as legal guardianship (to different degrees and with the restrictions necessary to afford the child sufficient autonomy) can also be explored to provide the care that such a child may need indefinitely.
Conclusion
Ultimately, the goal of providing for children in the event that one is no longer able to do so is a very laudable one. However, the idea and execution are two very different things. A comprehensive estate plan that takes all the particulars of your situation into consideration and contains protections necessary for each child and dependent, would be great for those children as they mature and begin to take charge of their affairs. A bad estate plan can make things worse than even having no plan at all. To be sure you are setting your children up for success even in your absence, be sure to consult experienced estate planning attorneys to build the perfect estate plan for you.
About the Author: Roxane Kaye, has been practicing law since 2002. She is admitted to practice law in Michigan state courts and before the Federal Bankruptcy Court of Eastern Michigan, Southern Division, as well as the Federal District Court of the Eastern District of Michigan. Roxane covers cities such as Burton, MI, Flint, MI, Fenton, MI, Beecher, MI, Lapeer, MI, Waterford, MI, Auburn Hills, MI, Pontiac, MI, Howell, MI, Owosso, MI, Wixom, MI, Rochester, MI, Rochester Hills, MI, Novi, MI, and South Lyon, MI.
You may contact Roxane below:
Roxane M. Kaye
Kaye Law Office, PLLC
8161 S Saginaw St
Grand Blanc, MI 48439
