The birth of a child brings many changes, as well as a great deal of responsibility and new worries. Expecting and new parents often worry about who will take care of their child or children if the unexpected happens and both parents die. No one wants to consider this horrific possibility, but unfortunately, tragedies do happen. It is for this reason that the need to be prepared is so important.
One of the biggest decisions new and expecting parents must make is determining who will take care of their child or children in the event both parents are no longer alive. This designation is done in the client’s Last Will and Testament. By not putting these wishes in writing, the parents run the risk of the probate court needing to decide who will raise your young children. Additionally, this may develop into a major conflict between two sides of the family who will likely want to step in as guardian of your minor children. Having this decision made and put clearly in writing avoids this potential for conflict. It also allows the parents to select someone who will care for and raise their children similar to how they would have been raised had the parents lived. The parents are then able to protect the future of their children and provide them with a stable and loving environment selected by them.
Depending on the age of the minor children involved, I normally advise clients to choose a primary person as guardian and a secondary to serve as a back-up in the event the first choice is not able to handle the responsibility or is not alive at the time. Having a second choice selected adds extra protection to give the parents peace of mind that their children will be cared for in the event the parents are gone.
Guardianship is only one consideration for new and expecting parents. Not only do parents want to ensure that their children are loved and cared for, but they also want assurance that the children will be financially supported. The best method to accomplish this is through a revocable living trust. Through a revocable trust, the parents’ assets are funded into the trust, meaning they will be there for the children when they reached a specified age. Parents can give discretion to the trustee to provide financial assistance to the guardians to care for the children, and the parents can also structure the disbursement of the trust funds so that their children receive them in percentages at certain ages. For example, the parents may say that their children will receive one-fourth (1/4th) of their estate share upon turning 18 and the remainder at 30 years old. The trust can also require a portion of the child’s trust share go towards education expenses or other specified living expenses. Essentially, the parents have free reign to structure their trust however they see fit to ensure that this money is there for their children in the event the parents are not. Once the trust is prepared, the parents should also properly fund the trust by naming the trust as the secondary beneficiary for life insurance policies or retirement accounts while their children are minors. An estate attorney and financial planner would be the best resource for parents to use to ensure that these assets are protected and funded in their trust.
At Sullivan Law, 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. Sullivan Law is also a provider law firm through the Hyatt Legal Plan and regularly helps clients employed by many of the regional companies in the Greater Detroit area.
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!