ESTATE PLANNING FOR PARENTS WITH
MINOR CHILDREN If You Have Minor Children, Or Children of Any Age Who Have Special Needs, Estate Planning Takes On a Heightened Importance
NASH NASH BEAN & FORD, LLP ILLINOIS ESTATE PLANNING ATTORNEYS
Creating a comprehensive estate plan is something that everyone should do regardless of the value or size of your estate. If you have minor children, or children of any age who have special needs, estate planning takes on a heightened importance. Should something happen to you, you undoubtedly want to leave your children well provided for and ease the transition to a new guardian to the extent possible. Your estate plan can
The primary goal of your estate plan will be providing a legal roadmap for the distribution of your assets when you die.If you have minor children, this becomes particularly important given the consequences of dying intestate, or without an estate plan in place.
be the key to accomplishing both of these important goals.
WHY IS ESTATE PLANNING NEEDED? A comprehensive estate plan can accomplish a wide variety of goals. The primary goal of your estate plan will be providing a legal roadmap for the distribution of your assets when you die. If you have minor children, this becomes particularly important given the consequences of dying intestate, or without an estate plan in place. Should you fail to create an estate plan, the laws of the State of
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Illinois will determine what happens to your estate assets. While this does mean that your children will inherit from your estate by law, a minor cannot inherit directly. Someone must control a minor’s inheritance until the minor reaches the age of majority – 18 in Illinois. If you are married to the child’s other biological parent at the time of your death, your spouse will retain legal custody of your child and be appointed to control the child’s inheritance. If, however, you are not married to your child’s biological parent it becomes much more complicated. In this case, which in today’s society is the case more often than not, the only way to know with certainty how your child’s inheritance will be handled is to decide yourself in your estate plan. Assuming you have not included any illegal terms in your estate plan and that all documents are properly drafted and executed, a court is required to follow your wishes as set forth in your estate plan.
GUARDIANSHIP – WHO WILL CARE FOR YOUR CHILD? The top priority for most parents when considering the possibility of their own death is who will care for their child. In the United States, over half of all marriages end in divorce, meaning that the odds are favorable that you are not still married to your child’s other parent. If you are, however, the other parent
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will automatically have legal custody of your child. If you are divorced at the time of your death and the other parent is still alive, willing, and able to take custody of your child that is likely what will occur. Often, however, the other parent is not willing or able to care for a child, leaving the issue of legal guardianship up in the air. Ultimately, a court will have to decide who to appoint as the child’s legal guardian; however, you have the opportunity to let the court know your wishes by nominating a guardian in your Last Will and Testament. Some factors to consider when nominating a guardian include: Familiarity – is your potential guardian someone with whom your child has an established relationship? Aunt Sally in Canada may be your sister but if your child has never met her it could be very traumatic to be placed with her after losing you. Proximity – does the guardian live close by or is he/she willing to relocate? This is more important for older children who have established routines and friendships. Uprooting them after losing a parent could add to the trauma. Ability – does your nomination have the financial and practical ability to care for your child? If finances are an issue, have you made sufficient arrangements in your estate plan to provide funds? Beliefs/philosophies – choosing a guardian who shares your basic parenting style and belief system should prevent the additional stress of your child having to adjust to a whole new way of doing things.
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Willingness – never assume that someone – even a family member – is willing to be your child’s guardian. Always sit down and discuss the issue before nominating the individual to avoid a problem down the road.
INHERITANCE – OPTIONS FOR TRANSFERRING ASSETS Minor children cannot inherit assets directly which makes your estate plan even more important. Someone must manage and control any assets you gift to your children until your children are legally able to own them. As a general rule, the person who has legal guardianship over a child is the default custodial beneficiary for the child. For example, if you ex-spouse has custody of your child after your death any assets left to your child would be controlled by your ex-spouse unless you make plans to the contrary. This precise scenario is exactly why people often choose to make those plans – they do not want an ex-spouse to control an inheritance left to a child. Even if you are comfortable with your child’s guardian having control over the inheritance you leave behind you may not wish the balance to be handed over to your child when he or she reaches the age of majority. Again, absent instructions to the contrary that is what will occur. Legally, your child is entitled to receive an inheritance when he or she turns 18 years old. If the inheritance is substantial, leaving it directly to an 18 year old may not be the best plan even if the child is mature and responsible. For this reason, many people choose to create a trust.
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A trust offers numerous advantages over leaving a direct gift to a child. For starters, you have the ability to name a trustee to manage the trust funds and oversee scheduled disbursements. Appointing a professional trustee ensures that the funds will be managed responsibly and prudently. Although disbursements will be made to your child’s guardian, the guardian will not have access to the principal of the trust. The other huge advantage to a trust is that the trust can continue to manage the trust assets long after your child turns 18 years old. Although you may include a lump sum disbursement at the age of 18 the trust is not required to pay out the balance held in the trust when your child reaches the age of majority unless you direct same. In fact, a trust can provide staggered disbursements as your child ages and matures, providing more reassurance that the inheritance you leave behind will not be squandered. If you are the parent of a minor child, your estate plan takes on even more importance than it would without children. If you have yet to create an estate plan now is the time to contact an experienced Illinois estate planning attorney to get started.
REFERENCES National Federation of the Blind, What Parents of Children with Disabilities Should Know Montana State University, Estate Planning for Families with Minor and/or Special Needs Children Martindale.com, Estate Planning with Minor Children
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Nash Nash Bean & Ford, LLP About Nash Nash Bean & Ford, LLP Dedicated to providing you with quality estate planning resources, we strive to arm you with the information you need to make an informed decision about your family's future. If you have a well-drafted estate plan in place, you'll ensure that your estate passes to whom you want, when you want, and is carried out in the manner you've chosen. Rest assured that your family won't have to endure the public process and costly matter of probate. Call us for guidance on putting a solid estate plan in place.. Nash Nash Bean & Ford, LLP www.nashbeanford.com Geneseo 445 US Highway 6 East Geneseo, IL 61254 Phone: (309) 944-2188 Fax: (309) 944-3960
Estate Planning for Parents with Minor Children
Moline 5030 38th Avenue, Suite 2 Moline, IL 61265 Phone: (309) 762-9368 Fax: (309) 944-3960
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