Recently, I have received a lot of calls from new parents inquiring about estate planning. They are calling because they wish to appoint a guardian in case they pass while their children are minors. While I can appreciate “children” being a strong motivator to get your affairs in order, I think that there are major benefits (beyond appointing a guardian) that come from creating an estate plan for the benefit of your children.

Having a comprehensive estate plan will allow you to:

1. Designate a guardian: The guardian of a minor is responsible for the minor’s physical wellbeing, providing not only food and shelter for the minor, but also love and emotional support to the child. A parent may appoint a guardian for a minor by Will. If you don’t appoint a guardian, the state will appoint one for your children.
2. Designate a conservator: The conservator of a minor is tasked with the minor’s financial wellbeing in circumstances where a minor owns property requiring management or protection that cannot otherwise be provided. This is particularly important when a minor is named to receive an inheritance because minors cannot legally own or receive property outright. A conservator is authorized to make payments from the minor’s assets on behalf of the minor for the minor’s health, benefit, and welfare. Like a guardianship, if you don’t appoint a conservator, then the state will appoint one for your children.
3. Create a trust: There are two types of trusts that you can create when planning for minor children.

a. A revocable living trust: Revocable living trusts provide both asset management and some level of asset protection for minor children while the assets are held in trust. Contrary to a testamentary trust, this type of trust is established while you are alive meaning that you can fund the trust and possibly avoid probate proceedings. Moreover, because the trust is “in play” while you are alive, should you become disabled then the trust would be used to care for any minor children. If you don’t create a trust and you pass while your children are minors, the state will create one for you.

b. A Testamentary trust: A testamentary trust is a trust that is created by an individual’s Will and takes effect only after you pass. After your passing, all assets are probated to the Settlor’s testamentary trust. Once the testamentary trust is established, no continuing supervisory proceedings are necessary, and the trust will be administered similarly to a living trust would be administered. As mentioned above, a testamentary trust will require probate proceedings and it cannot be funded while you are alive. Nonetheless, this is a good alternative as it is (usually) less expensive and will accomplish the same goal. Not to mention that not everyone needs a trust while they are alive.

If you have minor children and want to make sure that they are properly cared for and loved if the worst were to happen, please give Denise Medina a call at (248)380-0000.