You have a minor child who depends on you for their survival, so you need to make sure that they will be cared for if you are ever unable to care for them. By creating an estate plan, you can address your minor child’s care and custody and provide instructions about how your money and property should be used for their care should something happen to you.
An estate plan is not just about your own peace of mind. It can also have a considerable impact on those closest to you. If you have minor children, you need to account for their needs. Your will can designate a guardian for your minor children in the event that tragedy befalls both you and the child’s other legal parent. It can also set up a trust and appoint a trustee to manage accounts and property for your children’s support. Careful use of a trust and trustee for this purpose may eliminate the need for a trustee bond (paid to secure performance of the trustee’s duties) and avoid court supervision of a minor child’s inherited assets.
Care and Custody of Your Child
Creating an estate plan allows you to name someone to care for your minor child if you are unable. A child under the age of eighteen cannot legally care for themselves (unless they have been emancipated). A guardian must be appointed to take care of the minor child if both parents have passed away or are unable to care for the child. It is important to note that if the other legal parent is still alive, that parent may receive custody of the child. However, you need to have a plan in case there is no other legal parent or the other legal parent cannot care for the child. If you do not choose a guardian, the judge will look to state law to determine the appropriate guardian, who may not be the person that you would have chosen.
How do you nominate a guardian?
There are a few different ways to nominate a guardian to care for your child after your death. First, it can be done in a last will and testament (also known as a will). In this document, you can name someone to be your child’s guardian upon your passing, a person to settle your affairs (executor or personal representative), and people to receive your money and property, along with any instructions. Similarly, you may use a pour-over will to name a guardian for your child upon your death. A pour-over will also allows you to name your trust as the beneficiary of any money and property that goes through the probate process.
How do you name someone to step in when emergencies arise?
While an estate plan usually focuses on planning for your death, it is also important to plan for the situation in which you are alive but unable to act or make decisions, including naming someone to temporarily care for your child. In addition to delegating your parental authority when you are unable to act, this document can be used if you are traveling and need someone to make decisions for your child. It is important to note that this document is only effective temporarily, and your chosen person’s actions are limited in some degree.
Rules for Your Child’s Inheritance
Who will be in charge?
A minor child cannot handle their own financial affairs. If you pass away without an estate plan, the other legal parent may be in charge of managing the money and property you have left to your child. If the other legal parent is unable to manage your child’s inheritance, then the court will have to appoint someone. An estate plan allows you to name the person you want to control the money and property. Without an estate plan, the judge can only use state law and the people who appear in court to determine who will manage the inheritance.
When and how will your child receive their inheritance?
If you do not have an estate plan, your child’s inheritance will be managed for their benefit until they reach the age of eighteen, and then it will be given to them outright. Although they will be a legal adult, they may not be prepared for a large influx of money and property. Also, you may have certain things that you want the money to be used for. With a trust, you can draft instructions for exactly how you want the inheritance to be used. You can create a revocable trust or include these instructions in your will (known as a testamentary trust). The important distinction between these two options is that a will has to be filed with the probate court, and the proceedings will be public and overseen by a judge. A properly drafted and funded revocable trust, on the other hand, can be managed without probate, and no documents need to be made public.
There are many options available to you when crafting instructions for how your child’s inheritance should be managed and distributed. You can structure your child’s trust as an incentive trust to allow the trustee to give your child money only after they meet certain goals (e.g., successfully completing postsecondary education, being sober for one year). Alternatively, you can leave the decision of how and when to give out the funds exclusively up to the trustee’s discretion to distribute for the child’s heath, education, maintenance, and support. Under Wisconsin law, you can even decide what age your child can serve as their own Trustee.
When considering who to select as the trustee of your minor child’s trust, you can choose a family member who knows your child and understands your wishes. If you do not have family that you would like to fill this role, you can look to your close friends. These people may already be a large part of your child’s life and may understand your wishes. Lastly, if you do not have someone who you would want to serve as a trustee, you can hire a professional trustee, though be aware that professional trustees charge for their services. While all trustees are entitled to compensation, a professional trustee may be more expensive and have set fees.
Although state law will provide your child with a guardian, someone to manage their inheritance, and a distribution plan for their inheritance, this is the least desirable result. You have the power to design an estate plan that is unique to your child’s circumstances and allows you to choose the most trusted individuals to guide them if you are no longer able to. We would love the opportunity to help you create the best plan for you and your child or to update your existing plan. Call us to schedule an appointment.
 Introduction to Wills, Am. Bar Ass’n, https://www.americanbar.org/groups/real_property_trust_estate/resources/estate_planning/an_introduction_to_wills/ (last visited Apr. 7, 2023).