While most minor children will thankfully never have to deal with the loss of a parent, it’s still something that every parent should plan for. A comprehensive estate plan can protect your children in case something happens to you and provide them a degree of stability during a very difficult time.
Below, we’ll explain how you can use a detailed and thoughtful estate plan to protect your kids and make sure they’re taken care of in case the worst happens.
How Can a Will or Trust Protect My Child’s Financial Security?
An estate plan typically includes a will, a trust, or a combination of both. A will is a document that distributes your property after your death. It can also appoint a legal guardian or guardians for your child.
Trusts are more complicated. You might establish a trust that:
- Manages and protects assets until your child reaches a certain age (minor’s trust)
- Prevents an inheritance from impacting a disabled child’s Social Security and other public benefits (special needs trust)
- Holds all your assets until all your children reach a specific milestone, such as turning 21 (pot trust)
Other trust options, such as a living trust, can help minimize the need for probate.
RELATED: Is a Living Trust Better Than a Will?
Your estate planning lawyer can help you understand your options and craft a plan that meets both your short- and long-term goals. You can also use our estate planning checklist to look for issues that might affect your plan.
What if I Have a Child From a Previous Relationship?
If you’ve remarried and you have a child from a previous relationship, you should protect his or her inheritance with an estate plan. Under Michigan’s intestacy rules (the laws that decide how your property gets divided if you don’t have a will), all your property will go to your surviving spouse when you die. That means your child from a previous relationship will get nothing.
When you draft an estate plan, you can designate property for your child, ensuring that he or she gets an inheritance. It’s also possible to use a nuptial agreement to give property to a child from a previous relationship.
Regardless of which option you use, you should consult an estate planning attorney so you can ensure that you properly protect your child’s inheritance. A poorly drafted estate plan or nuptial agreement might cause confusion, unnecessary disputes, delays, and other problems.
RELATED: 5 Estate Planning Questions for Grand Rapids Families
Why Should I Appoint a Legal Guardian for My Child?
If you die or become incapacitated, someone will have to care for your child. Unless you have a legal document appointing a guardian who can fulfill this role, the court will assign someone. While the judge might make a decision that lines up with your wishes, there’s no guarantee.
Additionally, getting a court-appointed guardian can take a long time and involve a lot of expenses. After the loss of a parent, children need stability — not the experience of watching the adults in their life fight over custody rights.
When you appoint a legal guardian for your child, you take control of this situation. As you’re deciding who to designate as your child’s guardian, ask yourself:
- Who is best suited to care for my child’s physical and emotional needs?
- Is this person financially responsible?
- How would an out-of-state guardian impact my child’s connection to friends, family, and other people who are important to them?
- Should I appoint both a temporary and permanent guardian?
You can also appoint a separate trustee or property guardian to oversee the financial aspects of your child’s inheritance.
Life Insurance and Retirement Accounts
In addition to appointing a guardian and drafting a will or trust, you should also consider how your life insurance and retirement accounts will transfer to your child. Depending on your circumstances, you might not want to have the child receive these funds directly.
Instead, you might transfer your retirement savings and life insurance benefits to a trust or to a Uniform Transfer to Minors Act (UTMA) account. For more information about these options, contact the estate planning lawyers at Phillips & Santana.
Discuss Your Estate Plan With Your Loved Ones in Advance
We believe that it’s wise for a parent to discuss his or her estate plan with trusted loved ones, especially when children are involved. If you don’t discuss the reasons why you appointed a particular guardian, for example, then other loved ones might get caught off-guard and suffer from hurt feelings at an already difficult time.
Explaining your wishes to these family members with patience and compassion can help avoid hard feelings and confusion if the unthinkable happens. If you need help, your estate planning lawyer should be willing to guide you through these conversations. You can also provide a written explanation of your decisions as part of your estate plan.
Get Help From a Grand Rapids Estate Planning Lawyer
At the Law Offices of Kari Santana, we help families in Grand Rapids and throughout West Michigan craft estate plans that meet their needs and fulfill their goals. We strive to build lasting relationships with our clients that are grounded on trust and mutual respect. If you’d like to learn more about our personalized approach to estate planning, schedule a consultation by either completing our simple online contact form or calling us at (616) 717-5759.
The content provided here is for informational purposes only and should not be construed as legal advice on any subject.