If youʼre a parent with minor children, estate planning is, or should be, a very important issue for you. Most parents donʼt like to think about what would happen to their children if they’re not able to take care of them and many think that itʼll never be an issue.
A common concern among parents of minor children is how to provide income for the care of their children if something were to happen to them. In addition, they worry about who will manage those funds to make the money last until the children reach adulthood. Parents put off the issue of discussing their estate planning with spouses because itʼs difficult to decide whom they would want their children to live with. One may want their family to take care of the child, while the other may have a different caregiver in mind.
In Florida, the person who cares for a minor child is called a guardian and Florida law considers parents the natural guardians. If something happens to a childʼs parents, there will have to be someone who can legally make decisions for that child, both financially and personally. Proper estate planning can address these concerns and help the parents choose who they want to take over these responsibilities. Estate planning attorneys are trained to know what questions to ask, what types of tools to use, and the techniques to discuss with their clients.
Each family has different issues to consider. Some families are blended, single-parent families, or have special needs, and each family has different financial arrangements and requirements. But all of these families can be planned for if the parents take the time to do it.
Letʼs discuss the basics:
Q. Who will take care of my children if something happens to me and can Illegally name that person in advance?
Too often, when both parents die unexpectedly at the same time, there are two sides of a family fighting over who will take custody of the child. Proper planning in advance can lessen or prevent the likelihood of this happening and can give parents the opportunity to make the decision for themselves.
Parents will often name one individual to care for their child and another to manage their childʼs money. They usually choose someone who will raise their child with the same morals, values and beliefs as themselves. When choosing a person to manage their childʼs money, they should name an individual whom they believe will responsibly administer the funds in the way they would have. The person chosen to manage the childʼs finances will be responsible for making financial distributions for the childʼs health, education, maintenance and support.
The parents should sit down with the people they have chosen to discuss and make sure that they are willing and able to take on the responsibilities. At least one person should be named as a back-up in case the first falls through for any reason. If the person named has a change in their life circumstances and can no longer take on the responsibility, the documents should be changed to name someone else, which is why these choices should be reviewed annually.
Q. Do I really want to leave an 18-year-old child a large sum of money with no restrictions to protect that money for his or her future?
Florida law says a minor child can not be left more than $15,000 with out setting up a guardianship through the court system and a major pitfall is that a child will receive any remaining funds not used for the childʼs care at age 18. Most parents donʼt want to give an 18-year-old a large sum of money at the risk of them wasting it on frivolous purchases within a short period of time. With the help of an estate attorney, a will can be drawn up to establish a trust fund for the child. Distributions can be made from the trust for the health, education, maintenance and support of the child. The trust should name someone who will responsibly distribute money from the trust to the child until its termination.
Q. I have a special needs child. How can I protect my child if Iʼm not here to care for him or her myself?
Parents of special needs children are well aware of the challenges that these children will face over their lifetimes. In most cases, these children are cared for solely by the parents and are often part of special government assistance programs. Itʼs very easy for a parent to unintentionally disqualify a child from these important government programs when no planning or improper planning has been done. If special needs children are given even a small amount of money, they could be disqualified, but there are other ways to provide support and care for these children without distance. The services a special needs child gets through these programs can usually not be paid for with any amount of money so proper planning is vital.
Parents with minor children face many tough decisions when considering what would happen to their children if they were to die. By taking the time to discuss and consider these concerns with an estate planning professional, many fears can be put to rest. I encourage all parents to begin asking themselves these questions and to seek professional advice.
Article provided by:
Katherine B. Schnauss Naugle of Naugle & Smith, P.L., in Jacksonville