The Importance of Estate Planning in Your 20s and 30s, Part I: Take Care of Your Children (and Future Children)

The most common reason why young families reach out to Bulman Dunie for estate planning is because they want to ensure that their children are protected should anything happen to them.

An estate plan offers several mechanisms to protect and care for your children should you pass away when you still have minor children.

Nomination of a Guardian

Within your Last Will and Testament, you have the opportunity to nominate a guardian for your minor children.

This is your opportunity to select who you would prefer to have physical and legal custody of your children, should something happen to you.

Although the appointment of a guardian still would involve the courts, the nomination of a guardian within a Will makes this difficult process much more streamlined. Why? Under the law, the judge will give priority to the person who a parent has nominated. The court must find compelling reasons why the nominated guardian is not fit and proper to serve in order to disregard the nomination.

After you nominate a guardian within your Will, you can always change your mind by updating your Will. Indeed, many clients change their minds about who they want to care for their children as their children age and as circumstances change. A common scenario arises when young clients nominate parents as a child’s guardian. As time passes and parents age, perhaps a grandparent in their 70s is no longer the right person to have custody of a teenager!

If you have children or are planning on having children, using a Will to appoint a guardian for your children (or future children) is critical and can provide peace of mind that if you were to pass away, your children would be cared for by someone you trust.

Protecting your Child’s Inheritance

Many families have large-term life insurance policies insuring Mom and Dad. If something were to happen to both parents, potentially millions of dollars of life insurance could become available to their children.

The very purpose of life insurance is to make sure that a child’s health, educational, and support needs are covered should both parents pass away. But must a child be given control of this inheritance?

A Will gives parents options for how to structure a child’s inheritance. Some parents opt for UTMA accounts, which hold a child’s inheritance until they reach 21.

Other parents prefer that their children’s inheritance be available to them, but not under their control until they reach an age older than 21. Some parents want a child’s inheritance to be given gradually, rather than having it be in one lump sum.

In a Will, you have options when it comes to when and how a child receives their inheritance. If you don’t have a Will, a child can receive total control of inheritance as young as age 18.

Nominating Who Will Be In Charge Of Your Kids’ Inheritance

Just as a Will allows you to choose the terms by which your child will receive their inheritance, the Will allows you to select who will be in control of a child’s inheritance.

Whether it be the custodian for a UTMA account or the trustee of a “testamentary trust” (a trust established under your Will), you can nominate who will control and safeguard a child’s inheritance until they are mature enough to control it themselves.

For example, if your child asks for a distribution from inheritance for their tuition payment, the custodian or trustee can pay their tuition. But, if your child asks for money to throw an epic high school graduation party, the custodian or trustee has the discretion to say no.

How can we help you plan for your family? Reach out to estate planning attorney Liz Farley at (301) 656-1177 or lfarley@bulmandunie.com.