Parents of young children usually have different estate planning considerations than parents of adult children have. One of those considerations should be who to appoint as the guardian of minor children in case both parents unexpectedly pass away. However, a less well-known consideration might be how you plan to leave assets for your children.Many parents leave assets for their children in a will. This can be a convenient option since a will is also the document needed to designate a guardian. However, leaving minor children assets in a will could be problematic.
What is the problem with using a will?
A will can be a good tool to leave assets to adult children, but minor children cannot own property or manage their own money. If your children inherit assets from a will or through intestate succession, someone of the court’s choosing will be appointed to manage those assets.
Your children’s other parent or the person who is named the guardian of your children will likely be named the guardian of each child’s property. If you are not married to your children’s other parent, you might prefer that the other parent does not control the money intended for your children. Similarly, the person you choose as your children’s guardian may have great parenting skills, but poor money management skills.
The guardian of a child’s property has an obligation to act in the child’s best interests. However, you may have more control over who manages your children’s money or property by putting those assets into a trust and appointing a trustee.
Other benefits to using a trust to pass on assets
A trust can help protect your children’s assets from being squandered while they are still underage. However, a trust can provide other benefits as well.
Some benefits to a trust, include:
- Specifying when each child will receive his or her inheritance
- Specifying how much of the inheritance you want each child to receive at one time
- Protecting each child’s inheritance from creditors
- Protecting each child’s inheritance from being split in divorce
- Specifying what each child’s inheritance can be used for
- Specifying what you want to happen to money that remains after a child’s death
As a parent of minor children, you may have estate planning considerations that single adults or parents of adult children do not have. There are multiple ways you can use your estate plan to protect your children and your children’s inheritances. However, setting up a trust can be an effective way to meet this goal.