For parents of minor children, under 18 years of age, there are important considerations you should be discussing with respect to your Last Will & Testament. Minor children do not have the ability to collect the funds of an estate or be their own decision-maker. This is why the estate planning documents of the parents should provide solutions to ensure the children are properly cared for with the least amount of complication and delay.
The first consideration is: who should be the legal guardian of your children? This is a decision about who will take physical custody of your children if both parents were unable to do so. Nominating a legal guardian is something that should be done in your Last Will & Testament. To the extent possible, both parents should come to an agreement as to the proper person(s) to serve as guardian and they should each have a Last Will & Testament stating this choice. If you do not address it, by either leaving it out of your Last Will & Testament or not executing one, this could lead to different persons asserting that they should be the guardians and potential litigation over the issue. You want to ensure that your children are with the individuals that you chose while also avoiding a time-consuming and costly argument over the issue. Once potential guardians have been chosen, you should make sure they are aware of the responsibilities and willing to undertake them. It is also a good idea to name a backup guardian in the event that your first choice is unable to serve.
Another consideration is how you want your assets allocated. If you have three children, you may initially answer – “all my children equally.” This may seem like the obvious answer. However, young children have different needs as time goes on and one may need more money than the others. A planning technique that may be utilized is to establish a “Common Pot Trust” wherein all the assets are pooled together in one trust for the benefit of all of your children. You would nominate a Trustee of the Common Pot Trust (this can be the guardian or someone else) that would have control over the assets and be able to support your children as needed. The Common Pot Trust can terminate upon the youngest child reaching a certain age (i.e. 25) and distribute the remaining assets equally to your children. After the youngest child has attained the stated age for the Common Pot Trust to be dissolved, you can provide that the assets be given to your children outright, or you can designate that the be held in further trust. The latter option can provide for further management of the assets by an individual other than the child or state that your child can be their own trustee at that time or at a later age. The trust can be drafted to provide creditor protection to your child, supplemental needs provisions if they require means-tested government benefits for any reason, or deal with any other specific concerns you may have.
Consulting an estate planning attorney in your area to explore all of the different planning techniques for you and your family is crucial, especially when considering the future of your children.