As a parent, you always want to provide the best for your children. You work hard to make sure your kids have their basic needs met now and will have a significant inheritance someday.
But sometimes, things don’t go according to plan, and parents tragically pass away while their children are still young. With that in mind, you may wonder what you can do to make sure your kids are provided for financially, in case you happen to die before they grow up. At the same time, you don’t want to set up your estate plan in a way that costs your children money or leaves them without proper guidance. After all, you cannot expect children or even teenagers to be able to manage a large inheritance.
Here are a couple of tips for estate planning for parents of minor children.
Often, married people with children make their spouse the primary heir of their will and beneficiary of their trust, so that they will have the funds to continue raising the kids. However, that is not always possible. For example, you could be divorced and have reasons not to trust your ex to use the money and assets appropriately. Or your co-parent could have passed away, leaving you the sole parent and guardian of the children.
In those cases, making your minor children the direct beneficiaries of a trust might be the best option. You can explain how you want the funds and assets contained in the trust to be used for the children’s benefit. The trust can direct when funds will be disbursed to your children, and under what circumstances it should be withheld. For example, you can set up the trust to give them regular payments starting when they reach a certain age. At another age, they can receive the remaining balance of the trust, or gain control of the trust as co-trustees.
If you have a trust with minor children as beneficiaries, make sure you have a trustee whom you can rely on to handle this important job.
Besides your will, trust and other estate planning documents, you can use life insurance to ensure that your children will not have to experience a reduced quality of life because you are not there to be a breadwinner anymore. This can also help you kids pay for college, for example.
Quality legal guidance matters
Before you establish your estate plan or make changes to an existing plan, you should consult an attorney who is dedicated to estate planning law. Their advice and help can eliminate mistakes and unintended consequences.