By Erik Hartstrom
Losing a parent is a tragedy at any age, that tragedy can be compounded by how the parent(s) left their financial affairs. When it comes to minor children, like Anthony Bourdain’s Daughter Ariane, the impact of her parent’s planning – or lack thereof – can have life-altering consequences.
If designations of a guardian or trustee have not been outlined in a will or trust, these decisions are left for the courts, often leaving judges to make a very difficult choice between competing relatives. In addition to appointing a guardian for any minor children, the court will also be required to supervise management of any money left directly to minor children until they turn 18.
Protect Your Child’s Future with a Trust
Parents who have properly planned their financial affairs by drafting a trust can appoint a trustee to oversee the distribution of their estate and a guardian who will oversee any minor children. Preparing a trust can empower a trustee to manage the estate for the child’s benefit. Parents can also decide when the child takes over management of their inheritance: for example, when they graduate from college, get a full-time job, or reach a predetermined birthday.
Choosing Key Roles
When designing your estate plan, you can separate the jobs of parenting (the guardian) and the job of managing the money (the trustee), or they can be the same person. What happens when the trustee and the parent/guardian have differing ideas on what is necessary for the child? A parent or guardian will choose the school, but if it’s a private school it will be the trustee’s job to decide whether to spend money on the private school tuition. Any parenting decision that involves money potentially involves the trustee. This situation can be more difficult if the parents are separated or divorced. If you want someone besides your ex-spouse (or soon to be ex-spouse) to manage the money, be sure to appoint someone who shares your parenting goals and can work well with the other parent.
Challenges in Changing Family Situations
A common challenge to wills or other estate planning documents is a change in the family situation. Under some circumstances, a new spouse or child may still be included in distribution of your estate, but this is a question that can be heavily litigated at great financial and emotional expense to the family.
Simplify with Good Counsel
The best way to ensure your financial goals are achieved after your passing is to work with an estate planning specialist. An experienced estate planning attorney will know the potential pitfalls and benefits of different strategies and decisions and will be able to guide you through the myriad of options available these days when setting up an estate plan.
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