A new addition to the family is an incredible blessing. With this precious gift comes the responsibility to ensure that your child is legally and financially protected if you pass away before your child turns 18. Creating the appropriate estate planning documents allows you to put the best plan possible in place to ensure that your child is protected and properly cared for throughout the remainder of their childhood.
Within your last will and testament or revocable living trust, a guardian can be nominated to care for your child if you are unable to do so. This individual, once appointed by the court, would serve as the “Guardian of the Person” or legal custodian of your child. A guardianship case would be required if the named individual is not a family member; a family law/custody case would be required if the named individual is a close family member to you. This individual would be able to choose the residence of your child, enroll your child in school, sign consent forms, manage your child’s medical appointments, and all other day-to-day activities as if they were you – the parent.
If your child receives assets or an inheritance valued over $15,000 before he or she turns 18, then a “Guardian of the Property” must file a guardianship case to properly manage, invest, and spend your child’s inheritance, so long as the transactions serve your child’s best interest. The “Guardian of the Property” must be appointed to manage these assets until your child receives the assets on his or her 18th birthday. The “Guardian of the Property” can be named in your last will and testament or revocable living trust, so the courts are aware of who you would like to oversee your child’s assets if you pass away while your child is still underage. The “Guardian of the Property” faces constant supervision by the courts to ensure proper management of the assets, typically through the yearly filing of annual accountings. One significant issue or downside to guardianship cases is the ongoing expense for the case until the case is closed, which occurs after your child turns 18.
One way to avoid the expense of an ongoing guardianship case is to create a testamentary trust for your child’s inheritance. This testamentary trust can be created within your estate planning documents, either your last will and testament or revocable living trust. If your child receives assets or an inheritance valued over $15,000 before he or she turns 18 (or whatever age you list in the testamentary trust), then the assets are moved to your child’s trust, managed by a trustee of your choosing, and distributed to your child at an age of your choosing (i.e., 18, 21, 25, etc.). The trustee does not need to be appointed by the court or face court supervision to manage the trust money. The trustee must continue to manage the money properly and is accountable to your child to ensure each transaction is for his or her best interest. Funds can be released early if it serves your child’s best interest, i.e., funds are needed for your child’s education or medical needs.
Since joining the firm as a paralegal in 2016, Rebecca Schultz is now currently an estate planning and probate attorney. Her true passion lies in helping individuals and families with their personal needs, so they may create a lasting and foundational legacy for their families. If you need additional assistance regarding any details with guardianships, wills or trusts, please contact Rebecca at rebecca@uslegalteam.com.
