Estate Planning with Minor and Disabled Children

There are two main questions to ask yourself when planning for a minor or disabled child:

  1. Who will take care of your child's physical needs? This is the role of a Guardian.
  2. Who will be responsible for managing your child’s inheritance until he or she is mature enough to manage it themselves? This is the role of a Trustee.

While the roles of a Guardian and a Trustee are both important, they require different skill sets. In order to pick the right person for the right job, it is important to know the duties each performs.

How to Pick a Guardian

A Guardian is responsible for caring for the physical needs of minor children, and disabled adults. They make decisions involving basic needs such as housing, clothing, medical care, and schooling. Some of the factors many parents discuss in choosing a Guardian are:

  • Values:  It is important that you name someone who shares your ideas and values for raising children. Does your potential Guardian(s) share the same moral beliefs and attitudes?
  • Age:  A Guardian must not be so young or old that he or she is unable to care for or deal with a very young child or disabled adult.
  • Financial Security: If the Guardian is not financially equipped to care for your minor or disabled child it may cause an undue burden on the rest of the Guardian’s family and lead to resentment against your child. For this reason, it is wise to consider leaving financial assistance to the Guardian to help raise your beneficiary.
  • Single or Married: You should also consider whether you would want your child raised by a single parent or by a married couple. If you name a couple, you should clearly state what you want to happen if there is a death or divorce between the couple. Generally, it is prudent to select a single person as Guardian, so that there is no conflict between Co-Guardians if one were to arise.
  • Existing Children: Does the potential Guardian(s) have children of their own. If they do, ask whether their children will welcome in your children. Also ask whether the parents will be able to handle the additional burden. Do not automatically rule out individuals whose children are already grown or who have no children. Sometimes a family with no children may better serve as a support network.

Determining a Guardian for your children can be a difficult decision. Your children’s Guardian will have the authority to make and influence all decisions for your children including where they live, the schools they attend, religious practices, and more. Making preparations and instructions in advance can ease the transition in the event of your passing.

How to Pick a Trustee

One tool for ensuring certain aspirations for your children are accomplished is the establishment of a Trust for your beneficiaries. Trusts are managed by a Trustee, not a Guardian, although the Trustee and the Guardian can be the same person. Trusts can help ensure that certain funds are provided for specified activities and events. For example, if you want an inheritance to be used for education, a future wedding, a first house, or start-up business, then your Trust instrument can help lay out instructions. A Trustee’s most important duty is to implement the Trust’s instructions concerning how the Trust property should be used to aid the beneficiaries.

To be clear – Guardians help determine how to take care of a beneficiary, while the Trustee decides how to use Trust assets to pay for the needs of the beneficiary, which often includes paying for the beneficiaries’ education, medical and living expenses.

Among other responsibilities, a Trustee must make an inventory of Trust assets; protect Trust assets and make sure assets are properly invested; prepare an accounting for beneficiaries; and, implement the Trust’s instructions as to how Trust assets are to be distributed. Importantly, the Trustee does not have to make these decisions alone. The Trust typically authorizes the Trustee to obtain necessary professional services to carry out the Trust’s instructions. Such professionals often include investment advisors, attorneys, insurance agents or certified public accountants.

The possibilities and alternatives for designing these Trusts are endless. For example, property can be kept in Trust for a beneficiary’s entire lifetime. In this situation a Trustee decides when and how much of the Trust assets will be distributed. This type of planning makes sense not only if a beneficiary is disabled, but also if the beneficiary has spendthrift tendencies or a drug or alcohol problem. The Trust can also provide protection for your child from a failed marriage or claims of creditors.

Alternatively, a parent can decide to space Trust distributions over several years or decades. This prevents children from misspending the inheritance by giving them time to mature. Or, if your child has reached maturity and is fiscally responsible, the Trust instructions can be quite flexible and allow withdrawal of Trust funds whenever he or she wants. Although the child has access to the funds, if properly drafted, the Trust will protect the inheritance from creditor claims, lawsuits, and divorcing spouses.

In the end, a majority of your decisions are going to be based on your particular preferences and objectives. If you have any questions, please contact our office.