Estate Planning for Children

Q. What are some of the estate planning techniques that I need to be concerned with in planning for my minor children?

A. There are many different approaches to estate planning for children. One of the foremost concerns for any couple with minor children is that the children would be properly cared for in the event of a common disaster. Insurance is a common tool to provide enough money for the support of the children.

However, money is not enough to raise children, and the selection of a guardian for the children should be carefully considered. The responsibility of distributing the money to the guardian either from the estate or from insurance can be controlled through a trust or through the probate and guardianship court. The decision-making process of how the guardian would receive the monies to care for the children should be decided when the will or trust is drawn by the attorney.

The money for college education is another concern for estate planners and parents. Planning for college expenses is often accomplished with insurance, special savings accounts, annuities, or a variety of other financial planning tools. Usually an attorney and a financial advisor make an excellent team in planning for college expenditures.

An estate planning tool that is sometimes used by parents is to spread out payment to children over a period of time in order for the children not to receive their entire inheritance at an early age. For example, some parents might plan for their children to receive 50% of their inheritance at age 21 and 50% at the age of 25 or 30. This would avoid the mismanagement of an entire estate at once.

Planning for emergency medical costs is another very important aspect in planning for the care of children. Parents should properly plan their own disability insurance in order for the children’s support to be continued in a time of illness or other incapacity. Often medical misfortunes of the parents or children can cause financial disaster to a family without proper insurance planning.

Another important element of estate planning for children is reducing or eliminating probate costs and arranging for the children to receive monies from the estate easily and quickly. This goal can be achieved often by the use of inter vivos or living trusts. A review of how this could be accomplished should be discussed with your attorney.