Most parents want to make sure their children are provided for in the event something happens to them while the children are still minors. Unfortunately, good intentions and poor planning often have unintended results. Here’s how to both protect and provide for the children you love.
Common Mistake: Don’t Use a Simple Will to Leave Assets to Minor Children
Many parents think if they name a guardian for their minor children in their wills, the named person will automatically be able to use the inheritance to take care of the children. But that’s not what happens:
- When the will is probated, the court will appoint a guardian to raise the child; usually this is the person named by the parents in their wills.
- But the court, not the guardian, will control the inheritance until the child reaches legal age (18 or 21).
- At that time, the child will receive the entire inheritance.
Common Mistake: Avoid Court Guardianship
A court guardianship for a minor child is very similar to one for an incompetent adult.
- Things move slowly and can become very expensive.
- Every expense must be documented, audited, and approved by the court, and an attorney will need to represent the child.
All of these expenses are paid from the inheritance, and because the court must do its best to treat everyone equally under the law, it is difficult to make exceptions for each child’s unique needs.
Correct Action: To Protect the Child and the Assets, Use a Trust
The best option is a revocable living trust, the preferred option for many parents and grandparents:
- The person(s) you select, not the court, will be able to manage the inheritance for your minor children or grandchildren until they reach the age(s) you want them to inherit–even if you become incapacitated.
- Each child’s needs and circumstances – even special needs – can be accommodated, just as you would do.
- And assets that remain in the trust are protected from the courts, irresponsible spending, and creditors (even divorce proceedings).
Assets that are trust protected are there for your child, but can’t be taken from them. Your children will grow up and need the continued protections you can provide in a revocable living trust.
The information above is general in nature and is not legal advice specific to your situation. If you have questions about your business, estate plan, or protecting your business or personal assets, you should speak with an attorney in your area for legal advice. If you live or do business in California and would like to speak with The Law Office of Tawnya Gilreath regarding your situation, please schedule an appointment.