As a parent, you want to do everything possible to protect your children. You buy safety equipment, research the best daycare centers and schools, and save for their future. A surprising number of parents, however, don't do one of the most important things to protect their kids: make an estate plan including a will, a trust, or both.
Maybe it's discomfort talking about mortality; maybe it's that death seems a long way off. It could even be, that, with small children, day-to-day obligations just make it too difficult to get to a lawyer's office. But we all know people who thought they had more time until, one day, they didn't. If you've recently gone through divorce, and especially if you have primary custody of your children, these are things you need to think about. Here are some reasons, and ways, to make sure your small children are protected.
As a parent of small children, you have two major concerns if something happens to you: who will care for your children, and how they'll be provided for. If your children's other parent survives you and is capable of caring for the kids, the first concern is addressed. If they are unable for whatever reason to care for your children, you will need to have an appointed guardian. You can accomplish this through a will.
Appointing a guardian is essential. If you fail to do so, and one must be appointed, the court will follow Minnesota law as to who has first priority, typically a close relative. This may or may not be the person you would have chosen. Another scenario is that there is a contest between people with equal priority under the law, resulting in a bitter court battle. If you name a guardian in your will, you bypass those risks. In addition, you have the opportunity to speak with your children's prospective guardian to ensure they're willing to serve and will raise your children as you see fit.
Many people assume that trusts are only for people with a lot of money. But if you have small children who need to be provided for, a living trust is practically a must. A living trust does a few things parents of small children will appreciate. First, a trust allows you, the parent, to maintain control of all assets in the trust during your life.
Second, it avoids the probate process, meaning assets pass seamlessly at your death without a complicated court process—and if the assets are intended for minor children, who cannot legally own property, the process is indeed drawn out and often costly. You can make the trust the beneficiary of your life insurance. This is important, as proceeds of a life insurance policy cannot be paid out to minors (nor would you want it to be!). If the money goes into a trust, it all goes to the benefit of your children, rather than being partially consumed in probate.
Third, and perhaps most importantly, you can dictate the terms of the trust and name the trustee, meaning you have some control over how and when money gets spent.
If you'd like to learn more about how you can protect the future of your small children using a will and trust, especially if you're a single parent, contact us at Mundahl Law. We look forward to working with you.