Sitting at the top of every parent’s list of priorities is one thing: to make sure their children are taken care of no matter what life changes or unfortunate circumstances occur.
A child losing both parents as a minor is unthinkable, but unfortunately, it does happen. Planning for their future can be overwhelming and comes with a multitude of questions. Properly planning monetary asset distribution for your children, conservatorship and guardianship for your minor children, and for any needs your adult or special needs children may have can give you and your spouse peace of mind knowing you have provided a stable future for all of your children.
Options for Distributing Monetary Assets
In the state of Michigan, children receive their share of their deceased parent’s estate at the age of 18. This occurs even if the parents did not have a will. The children’s guardian or guardians will watch over this money until the child is 18.
Most would agree that 18 is much too young to responsibly handle large amounts of money. For this reason, I usually recommend a revocable living trust for ensuring that the money is protected and ready for the child when the parent feels he or she is at the appropriate age.
A revocable living trust allows the estate to be handled completely outside of probate. The trust estate is handled by a person called the trustee, who is chosen by the parents, similar to an executor or personal representative in a will. The trustee is charged with a fiduciary duty to protect and invest this money so that it grows and is available for the children as they reach the required age.
A trust allows parents to be creative when planning for their children to receive their shares of the estate. A percentage can be given at specific ages, portions can be set aside for life events like graduation, college expenses, or even a wedding.
Guardianship Decisions
Whether a client’s children are older or they are new and expecting parents, a decision must be made determining who will take care of their child or children in the event both parents pass away.
These wishes need to be put into writing in the client’s Last Will and Testament. Without this document, the probate court could potentially decide who will raise their young children.
Having this decision clearly defined avoids potential conflict between family members wanting to step in as the guardian of minor children. It also allows the parents to choose someone who will raise their children in a stable and loving environment most similar to how they would have been raised if the parents were still alive.
When choosing a guardian or guardians for your children, I always recommend choosing a backup, or secondary guardian, that can step in in the event the first choice is unable to provide proper care or is no longer alive. Take into consideration things like financial stability, overall stability for the child, shared values, and the age of the potential guardians. It is always a good idea to ask the potential guardian or guardians to ensure they are comfortable stepping in if the unthinkable does happen. Ultimately, do what is best for your child and do not make decisions to spare the feelings of other adults in your life. While your sister or brother may feel like they would be the best person to raise your child, you may feel someone else would handle the responsibility better. Make the decisions that would be best for your family first.
Plans for Adult Children
Adult children are often overlooked, but it is important to properly plan for them as well. If your child is over the age of 18, do not assume that you will be given rights to their care or be allowed to act on their behalf should he or she become incapacitated.
I recommend parents have their young adult child sign both a medical and financial power of attorney. These documents allow your child to name an agent to act on his or her behalf for financial reasons, including accessing the adult child’s bank accounts, paying bills, preparing and filing his or her income taxes, and even handling legal issues on the adult child’s behalf.
In a similar manner, a medical power of attorney allows the parent or parents to act on behalf of their adult child for medical decisions in the event the child is incapacitated. The medical power of attorney ensures that the parent or parents have the ability to make vital medical decisions. Without this document, medical staff is given sole discretion over what decisions are best for your adult child.
Provisions for Special Needs Children
Planning for a child with special needs is often overwhelming for parents. Ensuring the child maintains their quality of life, continues to receive benefits, and is always lovingly cared for is at the top of their list. Special needs estate planning includes provisions on designating a guardian or conservator for the child, if needed, as a minor and on into adulthood, if necessary.
The best situation would be to create what is known as a Special Needs Trust. This document will allow your child to continue to receive public benefits given that the funds “inherited” by the child will not be going to the child but rather a Special Needs Trust. This trust puts the financial-making authority in the hands of a trustee, who will ensure that decisions regarding any money are made in the best interests of the disabled child. It goes without saying that the most important decision to be made is who the trustee should be.
Take the Next Steps
No matter the age of your children, here at Sullivan Law we understand the importance of planning for their future well-being. We offer estate planning packages at a flat and reasonable fee. We also offer free consultations to discuss what your needs are, what you would like to do, and how that can be best accomplished. Everyone’s needs are different, and your wishes should be clearly listed and understood.
Call us at 248.917.1351 or email at asullivan@sullivanlawonline.com to schedule your free consultation today. We look forward to working with you!