Appoint a guardian for your minor children. If you have children under 18 you will need to name a guardian in your will. A will is the only place where you can appoint a person to be a guardian of your child’s person and a financial guardian. Those can be two separate people or one person. The guardian of the child will be responsible for your children’s upbringing, including making decisions about your children’s health, schooling, and moral training, while the financial guardian oversees the inheritance.
You should also consider if the guardian can take care of your kids financially if you can not leave enough money for them. Discuss your intentions with the chosen individual to make sure that they are willing to act as a guardian if you were to die. It is also wise to choose a successor guardian in case the first person becomes unable to serve. If you don’t name a guardian or trustee then the state will name one for you.
If you are separated, single, or divorced and are the sole physical guardian of your children, it is crucial to have a will that sets forth your desires about who you want your child to live with if you die while the child is a minor. Express your concerns in the will if you believe the surviving parent is not capable of raising the children. While not guaranteed the courts will most likely honor the custodial parent’s wishes.
Consider setting up a trust. A trust is a legal arrangement whereby a person gives property to a trustee to manage for the benefit of a third party. Trusts can stand alone or be a part of a will. “A will is just one part of estate planning,” says Thomas. “The larger an estate is the more you rely [on trusts.]”
Take the case of Michael Jackson. The recently deceased entertainer set up a trust to contain most of his property, and he was his own trustee. His will decreed that whatever property was not in the trust at his death would be added to the trust and overseen by the trustees he chose upon his death.
The best practice is to set up a trust and/or a financial guardian for any children under the age of 18 because most states do not allow minors to inherit directly, says Thomas. In so doing you will need to appoint a trustee who is responsible for managing the money until the child reaches the age of adulthood or whatever age you determine.
Although a trust is oftentimes created for a minor, one should always consider transferring money to people of any age in trust. Just as Michael Jackson has left money, in trust, for his mother, assets can be left in trust for any adult. By leaving money in trust, the trustee can help manage the money, protect the beneficiary from creditor’s claims, prevent money from becoming available in a divorce, or allow for the beneficiary to receive government entitlements such as Medicaid. These trusts are technical and state specific. We strongly recommend meeting with an attorney for trust-based estate planning.