PROTECTING YOUR MINOR CHILDREN
By: Sandra L. Clapp
Sandra L. Clapp & Associates, P.A., Eagle, Idaho
As a parent, much energy and time is spent on the health and welfare of our minor (and even adult) children. If asked, most parents would place the needs of their children above their own. Why is it then that so few parents take appropriate steps to plan for the needs of their children if the parent is not able to provide for the child physically or financially? Every parent should consider the following basic steps to help provide a safe and secure future for their children.
LIFE INSURANCE.
Few things are more stressful for the survivors after an unexpected death than to learn the individual left the family with debts, medical expenses, and little available assets to recover from the tragedy. Inexpensive options for life insurance coverage are readily available. Purchase adequate insurance coverage to provide for the household and educational needs of your family.
BENEFICIARY DESIGNATIONS.
Once you have life insurance, a common mistake is to improperly structure the beneficiary designation on life insurance and other similar assets (such as retirement accounts and annuities). Never name a minor child as beneficiary of a life insurance policy or other assets that requires a beneficiary as the child will not be legally capable of receiving the proceeds without appointment of a conservator. If the child inherits the assets outright through intestacy or beneficiary designation, the child will receive full access to the funds between ages 18 and 21, but not later. Coordinate the beneficiary designations with a trust established for the child. Keep the beneficiaries updated, particularly in the event of divorce, because the beneficiaries will control over any provision in your will.
PREPARE A WILL.
In a will you can (a) designate a guardian to be appointed for the physical care of your child, and (b) establish a trust to hold the assets to be inherited by your child. By nominating the guardian, you can choose who is best suited to raise your children. You can also establish conditions on such appointment or guidelines for the guardian. You may consider speaking with the proposed guardian to ensure he or she is actually willing and able to undertake these responsibilities. A testamentary trust established in your will (or separate document) can receive your assets to administer for the child, including those to be distributed by beneficiary designation as discussed above. It is recommended the trustee identified in the will to administer the trust be a different person or institution than the individual(s) who is caring for the child to create a “checks and balances” between these roles. The trust can provide ages at which the child receives a distribution of funds and can be a tool to carry out your values and goals for the child. The trust can also provide guidelines for how funds will be distributed to the guardian of the children for needs of the child. These distribution guidelines in a trust may be particularly important if the guardian of your child is an ex-spouse who may attempt to frivolously spend assets set aside for the child.
POWERS OF ATTORNEY.
Prepare general powers of attorney for health care and financial powers to clarify your desires. In a financial power of attorney, it may be appropriate to include express provisions to authorize the agent to make distributions of your assets to care for your children, particularly disabled adult children who may rely upon you for financial support.
REVIEW.
Once you have taken these important steps, make it a point to periodically review your needs and desires to ensure your children are protected as they age and your situation changes.
This article is not intended to replace legal advice applicable to your situation and should be used only for informational purposes. As each set of circumstances is unique, please do not rely upon this information without seeking qualified assistance.
|
