Estate Planning For Parents of Minor Children: "But We Just Can't Decide on Guardians!"

As parents of minor children, it is absolutely essential that you have an orderly estate plan in place. This at a minimum means executing a will, which is a legal document that sets forth your wishes regarding disposition of your assets upon death, designates those individuals who will be responsible for the orderly administration and distribution of your estate, and designates the guardians of your minor children. Also strongly advised is the creation of one or more trusts to hold and manage your assets for the benefit of your children during their minority in the unthinkable event of the demise of both parents.

The selection of a legal guardian for your minor children if both parents decease is perhaps the most crucial component of estate planning for young families. You may select grandparents, aunts and uncles, cousins, or even close friends who are not related. For many, the choice is easy or obvious. Yet for others, this can be a daunting and seemingly unsolvable task. I have had clients tell me that they really want to put their estate plan in place, but they cannot because they just can't choose a guardian. This is NOT a good reason to delay or suspend the creation of an estate plan. My advice is to select the best among the bad options. In the absence of your guardian designation, the courts will control the decision of guardianship, and your children may well end up in the hands of the person(s) you would least want raising your children, or even worse, in the social services system. So bite the bullet and make that decision, even if it isn’t perfect.

In addition to executing your wills and designating guardians, I recommend the creation of one or more trusts whose purpose it will be to hold, manage, spend and ultimately distribute your assets for the benefit of your children. Within the trust, you will designate trustee(s) who will be responsible for these tasks. The trustee(s) may or may not be the same person(s) as the designated guardians, and there are pros and cons to choosing the same person for both tasks. The trust will set out the terms on which your trustees will manage, invest and spend your assets for your children’s benefit during their minority. It will also allow you to determine at what age, or ages, your children will be entitled to receive outright distribution of all or a portion of their trust shares. In the absence of a trust setting out such provisions, the assets will be held for your children in a statutory (UTMA) structure, and will become available to your children free and clear at age 18. For most parents who have saved to fund their children’s college educations and want to ensure that the funds will be used for education and related purposes, this would not be the desired outcome. A trust permits you to delay outright distribution of assets until a later age, while still permitting the assets to be available to the children, at the discretion of the trustees, for appropriate uses.

A simple essay such as this cannot fully set out all of the considerations which go into a comprehensive estate plan for young families. The message here is simply that if you are the parents of minor children, I believe you have a responsibility to have wills and a trust in place. It is a gift that you will leave to your children in the unimaginable circumstance that neither parent survives to see your children into adulthood.