Estate Planning for Parents of Minor Children

For parents, estate planning is about much more than deciding who receives property. A good plan addresses who will care for minor children, who will manage money for them, and how family members can avoid unnecessary confusion during a crisis. NOMINATING A GUARDIAN. A will is generally the primary document for nominating a guardian for minor children. The nomination is not an automatic appointment; a court must still determine what serves the child’s best interests. Even so, a clear nomination gives the court important evidence of the parents’ wishes. Parents should name at least one alternate and should discuss the choice with the proposed guardians. MANAGING AN INHERITANCE. Leaving property directly to a minor can require court-supervised management. A trust can instead name a responsible trustee and state when funds may be used for education, health care, housing, and other needs. It can also delay outright control until an age or series of ages selected by the parents. COORDINATE BENEFICIARY DESIGNATIONS. Life insurance and retirement accounts often pass by beneficiary designation, not under the will. Naming a minor directly can create administrative problems. Depending on the family and account, a properly drafted trust may be a more useful beneficiary. Retirement accounts require special tax analysis before a trust is named. ILLINOIS, MINNESOTA, AND WISCONSIN. All three states allow parents to express guardian preferences through estate-planning documents, but guardianship procedures, custodial-account rules, trust law, and execution requirements differ. A plan prepared in one state should be reviewed after a move. PRACTICAL DETAILS. Parents should maintain a list of important contacts, insurance information, medical needs, school information, and routines. That practical letter should supplement—not replace—the legal documents. THE BOTTOM LINE. Parents should coordinate wills, trusts, powers of attorney, beneficiary designations, and life insurance. The goal is to provide both legal authority and practical guidance for the people who may be asked to care for the children. This article provides general educational information and is not legal advice. Consult a qualified attorney about your specific circumstances.