Notes On Estate Planning: Children, The Most Important Asset
Why put together a Will or Estate Plan? For parents with estates large to small, one of the most common reasons is to ensure that your children are taken care of in the event you pass away. While important, this also involves deeply difficult and personal decisions. However, without such planning, in the event you were to pass away, the results for your children are messy, expensive, time-consuming, and you cannot be sure your children are cared for as you would have wished. So, to avoid this, there are two major decisions that need to be made:
Who Will Care For My Children?
Often the most difficult decisions one must make in putting together an Estate Plan is, “who will take responsibility for caring for your children if you pass away?” While a parent can never be replaced, it is important to take the opportunity to designate who you would want to physically care for your children. This is hugely important as you can carefully choose who embodies your theories on rearing children, your beliefs, and what’s important to you.
Generally, this designation is made as a “designation of guardian” for minor children. This document advises the Court that if your children need to have a legal guardian appointed to supervise their care, then you would want this person or persons appointed. You can also appoint more than one person to serve at once, and more than one person to serve in succession, in case your first choice is unavailable or for some reason unwilling to serve.
Who Will Care For My Children’s Property?
The next question becomes, “who will take care of the property I leave my children?” It is important to ensure not only that it benefits them, but to have someone help guide them and teach them how to wisely use the resources left for their benefit.
It is important to avoid leaving minor children any property outright. Generally, that means putting property in Trust. Legally, children cannot own property – someone must hold it on their behalf. In lieu of planning, that will most likely mean a guardianship. Guardianships are sometimes necessary but are generally not desirable because they are Court supervised proceedings which are expensive, time consuming, and slow-moving. Courts supervise each step of the way and there are annual accountings down to the penny each year. This is avoided by putting property in some type of trust until children are old enough and are responsible enough manage their own property. This trust can take many shapes depending on the goal, but at the least will appoint an individual or company to manage the money will provide rules as to how the money is to be managed and use. To Read “What is a Trust?” Click Here.
Finally, in many cases, it is best to plan for children to have their property supervised even after they legally become adults. If the estate you leave your children is more substantial, it will likely last beyond your children reaching the age of 18 when they could manage their own money. The question then becomes, is it a good idea to give an 18-year-old a large amount of money? In most cases, upon reflection, the answer is no. Therefore, in many cases trusts are planned to last well into legal adult hood. It is also possible to gradually give children more and more control over their own property to help them learn the responsibility. Further, for asset protection planning it may be advantageous to keep property in trust for your children’s lifetime!
With proper planning, bad circumstances can be improved and the one less burden relieved.
Redding Law, PLLC intends this educational article to illustrate a legal concept. However, the reader should note that this explanation is specific to Texas and is not intended to be legal advice for any specific person or situation. To receive additional copies of this newsletter or permission to reprint any portion please contact Redding Law, PLLC.
