By Bernard A. Krooks, Certified Elder Law Attorney
Here are some specific issues that arise if you have included minor children in your estate plan:
Who will take care of your minor children when you die? Even though it is possible (and even likely) that they will be adults when you die, you still need to consider, and plan for, the possibility that you will die while they are minors. If one parent passes away, the surviving parent will be in charge of making decisions for the minor children. It is important for you to consider who should be guardian of your minor children if there are no living parents. This is often one of the most contentious issues that couples face when estate planning. For this reason, many delay this conversation. However, delay often results in taking no action which can lead to confusion and additional expense.
Although the surviving parent will have priority over custody and guardianship of your minor children, the same is not necessarily true regarding finances. If you have assets (stocks, bonds, insurance, retirement accounts, etc.) in your name alone and you want to leave this money for the benefit of your minor children, you may nominate whomever you select to be responsible for managing those finances. You could leave the money directly to your minor children. This is generally the least desirable way of doing this since minors are not permitted to own property. A court proceeding will likely be necessary to have someone appointed to be in charge of those funds. This will necessitate the involvement of lawyers and could get expensive. This is one of those situations where an ounce of prevention is worth a pound of cure. In many cases where folks attempt to do their own wills without professional legal help in order to reduce costs, they end up costing their estate a lot more in legal fees to solve the problems that they inadvertently created.
Instead of leaving money outright to minor children, you could set up Uniform Transfers to Minors Act (UTMA) accounts for them, naming an adult custodian to manage the funds until the minor reaches age 21. Even better, you could set up a trust for the benefit of your minor children and have the money managed by a competent trustee for the benefit of the children until a certain age that you select. This way, the money can be held in trust even after the minor attains majority. If you decide to create a trust, you will need to select a suitable trustee. This decision can be almost as difficult as selecting the guardian of the minor children. One thing to remember is that the two roles do not have to be served by the same person. In fact, it is often advisable to have two different people serve as guardian and trustee. This way, one person is in control of the personal decisions for the minors and one is in control of the financial decisions. Some feel that this provides a good system of checks and balances and doesn’t give one person too much control.
While children bring great joy to us as parents, it does come with the responsibility to ensure their well-being not only when we are alive but also upon our death. So, do yourself a favor and think about who would be a good choice to be in charge of raising your children both from a personal and financial perspective. This way, you will be in a better position to discuss the pros and cons of your choices with your attorney and then, hopefully, make the right decision.
Bernard A. Krooks, Esq., is a founding partner of Littman Krooks LLP and has been honored as one of the “Best Lawyers” in America for each of the last seven year, past President of the National Academy of Elder Law Attorneys (NAELA), past President of the New York Chapter of NAELA and also served as chair of the Elder Law Section of the New York State Bar Association. He has been selected as a “New York Super Lawyer” since 2006. Call 914-684-2100 or visit elderlawnewyork.com.