The importance of providing for your minor children cannot be understated. While there are several levels of safeguards that can be implemented in a will or trust, here is a list of my top 5 planning techniques if you have minor children.
- Guardian: Appoint a guardian for your minor child. This would be a person that you trust to make parental and health decisions for your child but not necessarily financial decisions. Who would make the best parent of your child?
- Trustee: Choose someone to be Trustee of your child’s trust that you trust to make sound financial decisions. For some people this is not the same person as the guardian, although it certainly could be. Who would be the best person to be in charge of your child’s money?
- Delay payment: If you die while your children are young, do you want them to receive their entire inheritance when they turn 18? If you don’t do any estate planning, that is what will generally happen.
- Allow for flexibility: You can give your trustee the ability to decide to make early payments for the child’s health, education, to start a business or other expenses. You can also give your trustee the ability to delay payments until certain ages, if the child develops a substance abuse addiction, or if the child would be disqualified from their public benefits program if they receive their inheritance outright.
- Plan for supplemental Needs: In the event your child is disabled by the time they are supposed to receive a distribution, you can allow (or force) the trustee to put that child’s funds into a supplemental needs trust that provides for the disabled child without disqualifying them from governmental benefits.