Why Parents of Minor Children Need an Estate Plan
Parents of minor children need to plan for the possibility they die before their children reach adulthood. Minors do not have the legal status or cognitive ability to make decisions about their care and finances so an adult must act for them. Two important concerns are who will care for and be the guardian of the children and who will manage the children’s assets. In most cases, the same person(s) can fill the role of guardian and money manager. By planning ahead parents can have input on the choice of a surrogate decision-maker and how much control and oversight the surrogate has.
Parents may nominate a guardian for their children in their wills. Without prior planning, a court must appoint a conservator to manage assets for a minor. Since a conservator must report annually to the court and post a bond for the value of assets being managed, the child’s interests are well protected. However, conservatorships have ongoing administrative costs. Once the child turns eighteen, however, the conservator must deliver the assets to the child. Most parents do not want their children to have control over an inheritance at that age.
Fortunately, with basic estate planning, a conservatorship can be avoided.
Parents can dictate who will care for the children and who will manage the funds for the benefit of their children within their wills. This planning has options for the level of control the person has over the funds, either as custodian or trustee and allows you to decide at what age your children will receive their inheritance.