As a parent, you want to ensure that your children are physically and financially cared for if something should happen to you. Considering your children’s future is important when you create your estate plan.
If one parent outlives the other, that parent typically becomes the children’s guardian. What happens if both parents are no longer alive or able to care for the children? You should consider two things when planning how to provide for your children via your estate: guardianship and a Child Safe Guard Plan.
The Safe Guard Plan
One of the first things to consider when creating your estate plan is guardianship of your minor children or a Safe Guard Plan. It’s essential to find someone you trust to care for your children if something happens to both parents before they reach adulthood. When you nominate someone to be your child’s guardian, and if something does happen to you, the court will ultimately decide if your nomination is the right person for the responsibility.
When you are thinking about who your guardian should be, you need to consider if their value system aligns with yours. Will they pursue the same goals for your children as you would? How will they handle education and religious training?
Your potential guardian should be physically able to care for your children long-term, as well as financially able to handle the responsibility of caring for your child. Do they have the time to give to raising a child or children? Will they discipline in a manner that fits with your values?
One way to narrow the choices for guardians over your children is to create a list of pros and cons for each candidate you have in mind. If you and your spouse (or former spouse) are struggling to agree on someone, you might consider making separate lists and then sharing them so that you can see if you have any common candidates in mind.
Establishing a Trust
Minor children are usually not mature enough to handle inheriting money and property. Typically, that means that children won’t be allowed to access their inheritance directly. You may consider creating a trust to ensure that children have access to the funds they need.
When you create a trust, you give a trusted person control over the assets until the children reach legal age. Having someone you trust managing the financial aspects of your life for your children can be a relief. It allows you to ensure the financial well-being of your children even when you can’t be there with them.
You can create a trust for your children even without an established Safe Guard Plan and vice versa. One benefit of a trust is that children won’t inherit a large sum of money at one time. Another benefit is that a trusted adult handles the money and any expenses incurred by the estate.
If you choose to create a both a trust and safe guard plan, you can choose whether to make the guardian the trustee over your estate. One benefit to making the guardian and the trustee the same person is that the guardian won’t have to talk to the trustee every time money is needed for the children’s needs. A benefit of having the trustee separate from the guardian is you have another level of protection over your children’s rightful inheritance.
Having a trust in place for your children helps prevent mismanagement of funds that are designed to help provide for them as they grow. When you create the trust, you can designate how the funds will be used. For example, you can say that the funds can only be used for certain expenses. You can also specify the funds can only be paid to institutions or professionals who provide services for the children rather than being handed to the guardian for the guardian to pay for the services.
The last thing you want to do is leave your children with no one to care for them and no means of providing for their needs. When you are creating your estate plans, you need to ensure that you have planned for what happens if your children are still minors when you pass away. You will want to choose a guardian who is able to care for them sufficiently. You might also consider creating a trust to protect the assets until the children are old enough to inherit them directly.