How Do I Include Care for My Children in Estate Planning?
To make certain that parents’ wishes are followed, they should create a will that designates a guardian and a conservator in case both parents die, counsels The Choteau (MT) Acantha article entitled “Plan for children’s future when making out a will.”
A guardianship provides for the care of the children, until they reach adulthood (usually age 18) and gives the guardian the authority and responsibility of a parent. A guardian makes decisions about a child’s well-being, education and health. A conservatorship is designed to manage and distribute funds and assets left to children, until they’re age 18. A single individual can be appointed to do both roles, or separate people can be designated as guardian and conservator.
Frequently, the toughest decisions parents have is agreeing who they want to have the responsibility of raising their children and managing their money. Usually they select a person with similar values, lifestyle and child rearing beliefs.
It can be important to talk about the issue with older children, because some states (like Montana) permit children ages 14 and older to ask a court to appoint a guardian, other than the person named in parents’ wills.
You should also name a backup guardian and conservator, in case their first choices aren’t up to the task and review your choices periodically.
In most states, the law stipulates that when children attain the age of 18, they are able to get the property that was in the care of a conservator, no matter what their capability to manage it. Another option is to leave the assets in a trust, rather than a conservatorship. Trust provide the most flexibility and design options.
While a will can contain a trust, called a testament trust, that will manage the funds for a child until the age of 18 or some other age that the parent specifies in the will, a trust created as a separate document from the will is preferable. A testamentary trust is supervised by the court as part of a probate; whereas, the distribution directly into the trust at a parent’s death or at the closing of a probate is then administered by the trustee, without court supervision and the associated court costs, for as long as the trustee holds these assets. A trust can hold various types of assets, such as life insurance payments, funds from checking accounts, stocks, bonds, or other funds that can be invested and distributed to the children for various purposes or at set ages. The issue of whether parents should create a testamentary trust or stand-alone trust; who should serve as trustee, guardian, conservator, successor trustee; discretionary distributions for college, wedding, business or home purchase; and the age(s) of distribution(s) should be discussed with an experienced estate planning attorney.
Reference: Choteau (MT) Acantha (May 13, 2020) “Plan for children’s future when making out a will”