Young couples may feel that a will is not necessary as they have not accumulated enough assets that a will to distribute what they leave behind. However, if a couple has young children, a will is a necessity.
“Most people believe that a will is designed just to let heirs know what to do with their assets,” Adam Crouse, an estate attorney with Aleman & Associates, said. “This is true, but a will can also provide details on what the deceased wants to happen with any minor children.”
In most cases, spouses name each other as the beneficiary of their estate, assuming that the surviving spouse will use any assets to care for minor children. However, should both parents die simultaneously, the distribution of assets can be more complicated, Crouse explained.
“A decision needs to be made about who will care for the children should the worst happen,” Crouse said. “Naming a guardian in the will is the best way to make sure minor children are taken care of after their death, financially, emotionally and physically.”
When choosing a guardian, it is important to keep in mind the proximity of the guardian’s residence to where the children reside currently, as well as the children’s current lifestyle and religious beliefs. A guardian should also be financially able to care for the children. Both parents should choose the same guardian to avoid confusion should both parents die together.
“It is also very important to have a conversation with the person you choose as a guardian,” Crouse said. “Assuming guardianship of minor children is a big responsibility. You want to be sure the person you name is prepared should something happen to both of you.”
Once you have established guardianship, it is important to determine how any assets will be distributed. Without a will, any assets would be placed in a trust with a court-appointed trustee who would manage the inheritance until they are 18. Once the child reaches 18, the court oversight ends immediately and 100 percent of the balance of the trust is transferred to the child, regardless of financial maturity. The named guardian would also have to petition the court to access any funds necessary while raising the children.
“In your will, you can create a custom living or testamentary trust,” Crouse said. “This trust can be designed however you choose. You can instruct a trustee to keep the money in the trust, only releasing the funds in increments. The trust could read that funds can be released for tuition costs at 18 and then a percentage at 25 and the balance at 30, allowing a child to become more financially mature before receiving a large sum of money.”
Trusts can also be set up so that the guardian can petition the trustee to access a limited percentage each year for child-rearing expenses, removing some of the financial burden from the guardian.
“One way to establish checks and balances for your assets is to name a different person as the trustee than you choose as guardian,” Crouse said. “Although you may trust the guardian of your children explicitly, if your assets are significant, it is best to have more than one set of adults managing those assets for the children.”
It is important to remember that the guardian of your children has different responsibilities than the trustee. The guardian has physical custody of your children, handling upbringing, housing, schooling, medical decisions and emotional support while the trustee is the financial manager. That person manages the trust assets, invests money wisely and cuts the checks to pay for normal child-rearing needs.
If you have minor children, it is critical that you discuss your wishes after you are gone with a trusted attorney. For more information on wills, estates and trusts, contact Crouse at Aleman & Associates by calling 302-990-8801, sending an email or visiting them online.
