Parents with minor children create a last will and testament to make sure they can nominate individuals that are responsible for the custody and care of their children. While doing so, common questions about the process are:
(1) Who will take care of the kids?
(2) What happens to money left for the kids?
(3) How do we administer the assets and the children’s care?
This article should provide easy answers for parents (and others that are looking to care for minors) through an estate plan. More specifically, each of questions can be answered and the goals can be accomplished through a last will and testament.
Who will take care of the kids?
When estate planning, parents of minor children need to decide who will get custody of their kids, this is called, most commonly, a guardian. The individuals named as guardians will take legal guardianship of minor children.
There are both permanent and temporary guardians (most common for parents that want to name a permanent guardian that lives or is far away.) Obviously, this is a very important decision and parents creating last wills need to have a serious discussion of their children’s future.
Here are some tips for how to include these nominations in your last will:
- Both parents should have the same guardians and secondary guardians in their wills, that way, there is no confusion as to who gets custody of the children.
- Name an individual and a secondary guardian that is an individual. Naming couples can be a little dangerous, as down the line, an ex-in law could theoretically still be a co-guardian.
Who will take care of the money for the kids left in a last will?
Wills generally name the children as beneficiaries, with the assets going to a testamentary trust—of which you are the grantor—if the assets are transferred before the child /children reach a certain age. The trust is separate legal entity that is controlled by a trustee, who has fiduciary duties to the trust and children. Many states require a periodic update to the court on the children’s assets. Basically, the trustee takes care of the child's assets for the benefit of the child. As with guardianship, there should be a consistent order in naming trustees.
There are two schools of thought about naming trustees:
(1) some believe it's good to have the guardian also serve as the trustee, as the guardian will have knowledge of the children’s day-to-day needs—this may not be the best case where the guardian is not good with money or has financial problems
(2) some also believe that having a separate trustee will provide some oversight and balance to how the children are raised.
Either way, it’s each family’s personal decision about who should be named. Familial relationships and cooperation should be strongly considered. If there is no good choice, a corporate trustee, such as a bank, may be an option.
How does guardianship pass and how are assets transferred?
So how do your children and their assets get into the custody of your guardian and trustee? Initially, perhaps the most important job here is that of the executor. Depending on your state, this role can be referred to as the executor of the estate, executor of the will, personal representative, or by other names, but the concept is the same. The will executor is the person who “probates the will,” meaning he or she files the necessary documents in probate, usually through an attorney, to start the process of both transferring the assets and legal guardianship.
Generally, the secondary executors for a husband and wife are different, because naming in-laws can have some unintended consequences.
While each role is very different, the roles are important as they each achieve the goals set forth above, namely making sure your children are taken care of in the event that you are not around.
LegalZoom can help you create a will online, if you don't have one in place. Get started by answering a few simple questions. We will prepare your last will and testament package and send it to you.