1. Nominate a Guardian for Minor Children
For parents of minor children, your will can be used to nominate a “Guardian” for your children. The “Guardian” is the person legally responsible for raising your children if something happened to both parents. This is often one of the primary reasons parents of minor children choose to execute a will. In the absence of a Guardian nominated in your will, the local court of jurisdiction would decide who would become the guardian of any minor children. The court would also appoint a “Property Guardian” or “Guardian of the Estate” to manage the inheritance of each minor child until they turn 18. This may or may not be the same person as the “Guardian” of the person of each child. By executing a Will, you can choose who should raise your children and manage their property until they become adults, instead of leaving this to the discretion of the courts.
2. Set up a Testamentary “Pot Trust” to Provide for Your Children
A will can be used to nominate a guardian for your minor children in the event you pass away. However, in addition to a child’s physical needs, many parents want to provide financially for their children as well. One way to do this is through a testamentary trust that is set up inside your Will. This trust comes into place only if both parents pass away (for married couples) or in the case of a single parent, when the single parent passes away. Sometimes referred to as a “pot trust” this trust can collect all of your assets in one place, including non-probate assets like life insurance policies and brokerage accounts (imagine placing all assets into a giant pot—hence the name “pot trust”), and appoint a trustee to manage the assets on behalf of your minor children. The trustee is instructed to manage the money and use it for your children’s health, education, and welfare until they reach certain ages as designated in the document.
One nice feature of using a pot trust is that it allows you to choose the ages your children receive distributions of money. Many parents rightly feel that their children would not be ready to manage large sums of money at age 18, and so they choose a testamentary trust which allows them to retain the assets of their estate inside of the trust until the children complete higher education, or reach some other desired goal or age. One common scenario is to direct the trustee to hold the funds in trust until the children reach the ages of 25, 28 and 30. The children receive 1/3 of their inheritance at 25, ½ at 28 and the remainder at age 30. These numbers are only an example---the nice thing about a trust is that you can choose any ages you wish and that you feel are most appropriate for your children. A testamentary trust inside your will allows you to ensure you children have the wisdom and maturity of age that you feel is appropriate before they receive their inheritance.
You can choose someone you know is good with money to act as the trustee of this trust, or you can name a bank or financial institution as trustee. Either way, the trust only comes into existence and the trustee would only be required to act if something happened to the parent or parents who made the will. If you do not pass away before your children reach the ages specified in the trust, then the trust never comes into existence and you have no additional expenses or compliance costs versus a will without a trust. I find that most clients really enjoy this aspect of the testamentary trust.
Next Steps
For more help in creating the right estate plan for your family, please contact me to set up an appointment to discuss your specific situation. My office is fully equipped to make estate planning for your family as easy and efficient as possible, no matter where you are located in Wisconsin or Minnesota. I consult with clients via the phone, email, or Skype—just let me know your preference and we can use the communication method that works best for you. Are you curious about how this works? I encourage you to check out my reviews from satisfied clients to see what they have to say about working with my office. I understand the time demands of busy parents, and as a result my office streamlines the estate planning process to provide all of your documents to you in an efficient and convenient matter via the use of encrypted email and the internet. I operate a paper light practice that minimizes the waste and use of paper and energy while maximizing productivity and peace of mind. Finally, I offer flat fee pricing on estate planning packages that offers you the ability to know what you will pay at the outset of the representation and encourages open communication and efficient work practices between the client and the attorney resulting in a win-win situation for all parties involved. For more on how my virtual law office works, please visit my home page to read more about my practice and visit my contact page for further contact information. I look forward to hearing from you!