As parents you have probably created Wills that provide for the care of your minor children. Part of that provision should have been appointing a guardian who will provide a home for the child if both parents die while the child is still a minor (under age 18). Many people are unaware that a minor child cannot inherit financial assets outright. Any financial assets bequeathed directly to a minor child will be held by a court-appointed guardian of the child’s estate.
When someone dies, their Will is filed with the probate court. If the deceased was a parent who designated a guardian for their minor children, that person must be officially appointed by the Court. If the person designated as “guardian” will be handling the financial assets that the child inherits, they are called “guardian of the estate” of the child, and the Court has oversight responsibilities. The guardian of the estate is required to file a property management plan and an annual accounting with the Court. Every receipt and expenditure must be reported and documented in the annual accounting. Preparing the annual accounting can require the help of a CPA or attorney. Any large expenses from the guardianship estate must be approved by the Court before the money can be spent. Sometimes the Court appoints another attorney, called a guardian ad litem, to represent the child. Every expense incurred as a result of the court proceedings, including the fees of the assigned attorney, is paid out of the guardianship estate.
You can avoid the expense of a court-supervised guardianship of the estate if you give directions in your Will for a trust to be set up for your children after your death. You can appoint the Trustee who will manage the assets for your child’s benefit. You can give directions for how the Trustee is to disburse the funds during the children’s minority. One child may need more financial assistance than another, and the Trust can provide for differing financial needs. The Trust will be funded after your death.
Some parents prefer a revocable Trust that is created while the parents are living. If you die or become incapacitated, a revocable Trust can provide for your children. The person selected as successor Trustee can manage the revocable Trust and take care of each child’s financial needs.
Working with a compassionate estate planning attorney gives you the opportunity to provide for the care of your child/children and for the management of the financial assets they inherit. It gives you the ability to care for those you love when they need it most.
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