I wasn’t intending on making a series on this topic, to be honest. But when I was preparing my outline for this supposedly one-post-long blog, I realized there are actually several things to unpack when it comes to estate planning for minor kids. (I guess I owe it to you, too! Thanks to the heart-to-heart conversations I’ve had with prospects and clients alike–I have a better understanding of what concerns families with young children have in general when it comes to their estate plans.)
With that, let’s get right to one of the common considerations (if not the most common!) in estate planning for minor children: finances. Because let’s face it–this is almost anyone’s driving force in wanting to start an estate plan. In terms of families with minor kids, the typical questions go–How can an estate plan protect my minor kids financially? How can an estate plan help in managing finances when I’m gone, especially since my minor children won’t be able to? What do I include in my estate plan to ensure that my assets can protect my minor kids up to the time they can survive on their own?
... and so on.
To put all these concerns in a nutshell: How can an estate plan guarantee that my hard-earned assets are reserved for, and actually spent on, what matters to me most–that is, my minor kids and their needs?
Here’s how –
By making the proper beneficiary designations
Emphasis on “proper.” Now I know this is what most of us think an estate plan is all about–naming your loved ones as beneficiaries of your assets. In the case of parents with minor kids, however, making the proper beneficiary designations is not as simple as naming your kids as beneficiaries. Remember–they still lack the maturity to handle these resources. This may be true even when they reach majority age.
Proper beneficiary designations mean making sure your minor kids sufficiently receive and benefit from your estate without having any property and amount put to waste. As I always tell clients, a carefully drafted estate plan works as if you, the estate owner/parent, are still around and in charge.
By setting up a trust
Your estate plan can (and in many cases, should!) include a trust to address issues such as those I raised above. With a trust in place, parents with minor children are able to limit their kids’ access to their inheritance until such time you believe they’re mature enough to manage the wealth themselves. Whether you want your kids to receive lifetime funds, have guaranteed funds until they go to college, or anything in between, a trust can definitely handle that.
By assigning a guardian (for your estate)
When we speak of guardianship in relation to minor kids, what comes to mind is their custody and care–but we’ll tackle that in the next installment of this series! Now, we focus on guardianship for your estate–deciding who would be responsible for managing your properties and financial affairs in your place. Of course, having a guardian for your estate is crucial in ensuring that your kids receive what they should (and what exactly you had reserved for them) to answer for their needs and dreams.
And there we have it–estate planning considerations for your minor kids, with particular focus on finances. There’s plenty more to cover–let’s talk about that on the next blog, shall we? (*hint, hint* Guardianship as most of us understand it! ;) )