As parents, the last thing we want to consider is not being there for our children. It’s understandable, then, that when asked to consider that “what if” we try and avoid it. But it’s critical to confront the “what ifs” when estate planning to make sure your minor children are supported and cared for. Two of the biggest issues to address are: who manages their inheritance and how they’ll receive it.
A traditional will poses unique problems when minors are involved. While the probate court will probably agree to the guardian you name for your children in the will, that guardian won’t have any control over the children’s inheritance. Your children’s expenses are paid out of their inheritance and must be approved by the court, which has limited flexibility to consider individual needs. Then, when your children come of age, they get the remaining inheritance in one lump sum (no matter what!).
A better approach is setting up a revocable living trust (RLT) for your children. The guardian you appoint as trustee manages the children’s inheritance. You can give them the flexibility to spend more or less of the inheritance depending on each child’s needs. You can also provide for your children to receive their inheritance only when they’re older (for example, 25 rather than 18) or over time (instead of one lump sum). An extra advantage is that property in the trust can be protected from creditors.
Hopefully, the only guardian your children ever need is you. But thoughtful estate planning now ensures that your children will be taken care of if the unexpected happens. A properly set up RLT can meet your children’s needs and give you peace of mind.