You’re Never Too Young To Plan

For younger individuals, the topic of estate planning is very low on their priority list. After all, if your young (and I would probably include individuals under the age of sixty in the “young” category for purposes of this article), why would you need to plan for dying? You have your family – perhaps you have children who are still in school – your career, and your future to plan. No one likes to think about dying when they’re young.

But accidents happen, and people pass away unexpectedly because of illness. So, if you have a family, particularly if you have children who are of school age (or perhaps a disabled child), you should take time out of your busy schedule to formulate an estate plan. In that plan, you should think about several items, such as, who is the right person to be a guardian of your child and who should be trustee of the money you leave to your children.

In a Will, an individual can designate who the guardian of their minor child will be in the event that both parents pass away during the child’s minority. Our Courts almost invariably honor this choice. For example, if the parents draft Wills saying that if both were to pass away the husband’s brother should be appointed guardian of the couple’s minor child, there is a very strong chance that the brother will be appointed the guardian of the minor child. The only way that the brother would not be appointed the guardian is if the Court found that appointing the brother would clearly be against the best interest of the child.

If the parents failed to select a guardian – either they failed to have Wills at all or they failed to nominate a guardian in their Wills – then the Court would appoint a guardian for the minor child. Frequently, this means that a Court battle ensues between various factions of the family.

Who then is the best guardian for a minor child? A grandparent? An Uncle or Aunt? There certainly is no one answer. There is nothing that says a grandparent is inherently the second best choice to make decisions for a minor child. But there are factors that people can consider when making a choice as to who should be guardian of their child.

Some of the factors to consider are as follows: (1) the age, health, and financial/mental stability of the person; (2) the person’s educational background; (3) where the person lives; (4) the religious background of the person and the religion that you would prefer your child be raised; and (5) what would happen if you have selected a couple (your brother and his wife), and they get divorced? Most importantly, you should discuss your choice of guardian with the person you have selected. They should be comfortable with your selection, and their responsibilities.

In addition to guardianship considerations, if you have minor children, you need to consider how your assets will pass to your children. If do not have a Will or if your Will fails to contain a trust, and both you and your spouse pass away, a court-appointed guardian will hold the assets that pass to your children until such time as your children reach the age of majority, 18. When each child reaches 18, he or she is entitled to receive those assets that the court-appointed guardian holds for his or her benefit.

This could be a very imprudent way for assets to pass. For example, if both you and your spouse die with an estate valued at $300,000, and you have one child who is a minor, your minor child will receive $300,000 outright when he is 18. The question then is, how much of that money will be left when the child is 19? Probably, not much.

This could be avoided with the use of a trust in your Will for the benefit of your minor child. The money is then held and administered by a trustee that you have selected. Someone who you know will manage the money for your child’s best interests.

While the trustee could be the same individual(s) you have chosen to act as guardian of your child, the trustee and guardian do not have to be the same person. Sometimes it is best to choose one person to be the guardian and one to be the trustee. Once again, people’s circumstances vary.

The important thing is that you think about these things and take action today. There’s definitely truth in the saying that you should enjoy today because you may not be around to enjoy tomorrow.