Planning for the Future: Using Estate Documents to Protect Minor Children
Call (800) 747-9354
Free Consultation
For many families, the birth of a child is the first life event that triggers the realization that estate planning is necessary. What most families may not realize, however, is the breadth of protection that can be afforded to their children with relatively simple estate planning. Not only can they assure that their assets will be protected for their children, they can also designate exactly how those assets will be distributed to their children.
Estate planning allows pre-selection of exactly who can financially and legally care for their children through established trusts and wills. There are a few estate documents that, when used properly and sometimes in conjunction with one another, can provide assurance and a peace of mind that any minor children will have the adequate financial and custodial protection they need.
Living Trust
A Living Trust provides a wide variety of benefits, including the ability to hold assets in Trust for a child (or any other individual) and distribute them according to specifications set forth in the Trust by the creator of the Trust (known as the “Grantor”).
First, a Living Trust avoids probate. Probate can be quite costly, depending on the estate. By titling all pertinent assets in the name of the Trust, probate may be avoided resulting in a significant amount of money retained by the estate thus for the beneficiaries. Avoiding probate also keeps the distributions from an estate private.
Second, a Living Trust provides the opportunity for parents to outline exactly how their estate should be held and distributed to their children. The Trust serves as a vehicle to funnel essentially all assets and be dealt with centrally and all for the benefit of the minor child or children. Items such as life insurance policies and 401K policies, which would not fall under probate procedure, are able to be controlled under the Trust by the same provisions that control personal property, real property, etc.
Additionally, the Trust outlines exactly how and when the minor children will receive the property. The Trust is tailored to the specific family’s needs so that the child will receive income and principal from the Trust according to age or various life events. For example, sums can be given out on a set schedule when a child turns a certain age or during life events such as graduating from college and getting married. Determining when a child receives set portions of payments can prevent a child from receiving a large sum of money when they may not know how to handle it or ensuring it with legal guardian who may not necessarily be the best at handling the financial aspect of that child’s life.
Last Will & Testament
A last Will & Testament, whether as the sole testamentary document or acting as a “pour-over” will for a Trust, serves many functions in protecting minor children. The Will names the legal guardian for your children. Without it, the child may be placed with family or other individuals that would not be the choice of the parent or parents. Naming your guardian in the Will places your wishes in a legal document so that those wishes may be effectuated.
When the last Will & Testament acts as the sole testamentary document, it serves as direction for distribution to your children. It can ensure that specific bequests, such as family heirlooms, are directed specifically towards a child or children.
Special Power of Attorney in loco parentis
A Special POA in loco parentis is a document that can help designate responsible adults who can make healthcare decisions for the child when the parent is unavailable. Different from a guardianship, this document can be used when the child is simply away from the parent for a period of time. For example, grandparents can be listed on the Special POA in order to allow them to make healthcare decisions while the children are visiting the grandparents.
Irrevocable Trust
Although used much more sparingly than a Living Trust, an Irrevocable Trust may be a good option to set aside a lump sum of money for the benefit of a minor child. The Trust provides multiple protections, such as creditor protection. However, the Trust is also irrevocable which means neither the child nor the parent can simply remove the money at will. An irrevocable trust may be a good option for parents who have the assets and wish to set aside large protected sums for their children right now.
ABOUT THE AUTHOR: By: Christina M. Heischmidt, Attorney at DunlapWeaver PLLC
Christina is an attorney at DunlapWeaver PLLC practicing in Virginia and the District of Columbia. Her areas of practice focuses primarily on civil litigation in the areas of commercial, business and bankruptcy law. She also specializes in comprehensive estate planning and corporate transactional law. She was named to Virginia Business’s 2012 Legal Elite in Taxes/Estates/Trusts/Elder Law. Christina is active in numerous organizations including the Fairfax Bar Association’s Young Lawyers Section and the Trusts and Estates Section, the Northern Virginia Bankruptcy Bar Association, McLean Estate Planning Council, and a local women’s golf/networking group.
Copyright DunlapWeaver, PLLC
More information about DunlapWeaver, PLLC
Disclaimer: While every effort has been made to ensure the accuracy of this publication, it is not intended to provide legal advice as individual situations will differ and should be discussed with an expert and/or lawyer. For specific technical or legal advice on the information provided and related topics, please contact the author.
Living Trust
A Living Trust provides a wide variety of benefits, including the ability to hold assets in Trust for a child (or any other individual) and distribute them according to specifications set forth in the Trust by the creator of the Trust (known as the “Grantor”).
First, a Living Trust avoids probate. Probate can be quite costly, depending on the estate. By titling all pertinent assets in the name of the Trust, probate may be avoided resulting in a significant amount of money retained by the estate thus for the beneficiaries. Avoiding probate also keeps the distributions from an estate private.
Second, a Living Trust provides the opportunity for parents to outline exactly how their estate should be held and distributed to their children. The Trust serves as a vehicle to funnel essentially all assets and be dealt with centrally and all for the benefit of the minor child or children. Items such as life insurance policies and 401K policies, which would not fall under probate procedure, are able to be controlled under the Trust by the same provisions that control personal property, real property, etc.
Additionally, the Trust outlines exactly how and when the minor children will receive the property. The Trust is tailored to the specific family’s needs so that the child will receive income and principal from the Trust according to age or various life events. For example, sums can be given out on a set schedule when a child turns a certain age or during life events such as graduating from college and getting married. Determining when a child receives set portions of payments can prevent a child from receiving a large sum of money when they may not know how to handle it or ensuring it with legal guardian who may not necessarily be the best at handling the financial aspect of that child’s life.
Last Will & Testament
A last Will & Testament, whether as the sole testamentary document or acting as a “pour-over” will for a Trust, serves many functions in protecting minor children. The Will names the legal guardian for your children. Without it, the child may be placed with family or other individuals that would not be the choice of the parent or parents. Naming your guardian in the Will places your wishes in a legal document so that those wishes may be effectuated.
When the last Will & Testament acts as the sole testamentary document, it serves as direction for distribution to your children. It can ensure that specific bequests, such as family heirlooms, are directed specifically towards a child or children.
Special Power of Attorney in loco parentis
A Special POA in loco parentis is a document that can help designate responsible adults who can make healthcare decisions for the child when the parent is unavailable. Different from a guardianship, this document can be used when the child is simply away from the parent for a period of time. For example, grandparents can be listed on the Special POA in order to allow them to make healthcare decisions while the children are visiting the grandparents.
Irrevocable Trust
Although used much more sparingly than a Living Trust, an Irrevocable Trust may be a good option to set aside a lump sum of money for the benefit of a minor child. The Trust provides multiple protections, such as creditor protection. However, the Trust is also irrevocable which means neither the child nor the parent can simply remove the money at will. An irrevocable trust may be a good option for parents who have the assets and wish to set aside large protected sums for their children right now.
ABOUT THE AUTHOR: By: Christina M. Heischmidt, Attorney at DunlapWeaver PLLC
Christina is an attorney at DunlapWeaver PLLC practicing in Virginia and the District of Columbia. Her areas of practice focuses primarily on civil litigation in the areas of commercial, business and bankruptcy law. She also specializes in comprehensive estate planning and corporate transactional law. She was named to Virginia Business’s 2012 Legal Elite in Taxes/Estates/Trusts/Elder Law. Christina is active in numerous organizations including the Fairfax Bar Association’s Young Lawyers Section and the Trusts and Estates Section, the Northern Virginia Bankruptcy Bar Association, McLean Estate Planning Council, and a local women’s golf/networking group.
Copyright DunlapWeaver, PLLC
More information about DunlapWeaver, PLLC
View all articles published by DunlapWeaver, PLLC
Disclaimer: While every effort has been made to ensure the accuracy of this publication, it is not intended to provide legal advice as individual situations will differ and should be discussed with an expert and/or lawyer. For specific technical or legal advice on the information provided and related topics, please contact the author.
