You’ve drafted a standard will and included your children, so everything is covered, right? Not necessarily. In actuality, a basic will is just the starting point. There are other legal and logistical considerations that necessitate more detailed protections. Below are the four essential pillars that every parent needs to secure their children’s physical care and financial future.
Pillar 1: Naming a Guardian of the Person
There’s a difference between a Guardian of the Person and a Guardian of the Estate. A Guardian of the Person takes on the daily care of your child or children, while the Guardian of the Estate manages money.
Generally, you want to select a Guardian of the Person whose values align with yours, has a similar parenting style, and can offer a stable long-term environment. You’ll want to consider the person’s age, health, and life stage to ensure that they are fully capable of raising children. It’s also a good idea to consider backup successor guardians in the event that your primary choice is suddenly unable to take on the responsibility.
Consider drafting a signed memorandum of intent that expresses your wishes regarding education, religion, and lifestyle.
Pillar 2: Financial Fiduciaries and Asset Control (Trusts)
Leaving assets directly to a minor child can be legally problematic, as courts will typically freeze funds until the child turns 18 or 21 (depending on state law). This can result in the child inheriting a potentially large sum of money with no oversight or significant life experience to handle the responsibilities that come with an inheritance.
This is where trusts come into play. Testamentary and revocable living trusts are a couple of options that keep assets out of probate and provide immediate asset management and financial continuity. You’ll want to name a trustee to oversee and manage the funds (not the same person as the Guardian of the Person), whose financial mindset and habits align closely with yours.
It’s also a good idea to design phased payouts, such as 30 percent at age 25, 30 percent at age 30, and the remainder at age 35, for example. Or payouts that align with milestones like college graduation or a first home purchase. This ensures that the assets are thoughtfully spread out so that your child or children have longer term support.
Pillar 3: Temporary Guardianship and Healthcare Powers
It’s also important to address situations such as temporary incapacitation from an accident or illness, rather than being deceased. Establishing a legal authority for family members and friends that you trust allows them to step in immediately without waiting for a court decision.
Medical and educational powers of attorney allow designated caregivers to authorize emergency medical treatment, register children for school, or even make travel arrangements. This can be the same person named as a Guardian of the Person.
Pillar 4: Safeguarding Beneficiary Designations
Any account with a beneficiary designation, such as life insurance, 401(k)s, IRAs, etc., bypasses your will and probate entirely because they can be directly distributed to your named beneficiaries.
It may seem like a good idea when you’re setting these accounts up to name your children, but the same considerations mentioned above should be followed with beneficiary designations. Naming your trust as the beneficiary will ensure that insurance payouts and account transfers flow seamlessly into the financial structure you planned for your other assets.
The Bottom Line: Proper legal protection of your children requires tying together guardianships, trusts, temporary directives, and beneficiary alignments.
Wills and Wellness Estate Planning Attorneys can help you create a comprehensive estate plan that fully protects your assets and your children, and aligns with your overall financial plan.