How Younger Parents Can Benefit from Estate Planning

 Posted on January 30, 2018 in Estate Planning

Although it is not necessarily a pleasant thought, even young parents who are in good health should not hesitate to start creating an estate plan. Parents of minor children need to plan for the possibility that they may pass away before their children reach adulthood. Because those under 18 years of age do not have the legal standing or rational thinking ability to make decisions about their care and finances, an adult must act on their behalf.

When parents of minor children create an estate plan, two of the concerns they should address are who will be the guardian of their children should they pass away and who will manage their children’s assets. By planning for the worst, parents can have the peace of mind knowing that if something ever happened to them, their children would be raised and cared for by individuals that the parent’s themselves selected.

Planning for the Future

In situations where parents pass away or are incapacitated and they did not plan for this possibility, a court will appoint a conservator, or guardian, to manage assets for a minor. Through estate planning, parents can choose who will manage the funds for the benefit of their children. This planning has options for the level of control the person has over the funds, either as a custodian or a trustee.

A custodian is a person who is tasked with holding money in an account until the child or children turn 25. This type of account is often called a Uniform Transfers to Minors Act (UTMA) account. Using a custodian to manage the children’s finances until they are old enough to do so is more of a casual arrangement than a trust is. Custodians also have more discretion about how to manage the funds. Unlike a conservator, a custodian is not overseen by a third party or required to provide annual accountings regarding the child’s well-being.

Alternatively, some parents choose to establish a trust for their children. An individual, a bank, or trust company can be named as a trustee who then has the responsibility to manage the trust assets. The trust provides guidelines for how the assets will be used for the benefit of the child and when he or she will receive the funds.

Let Us Help

If you have further questions about conservators, guardians, custodians, trusts or any other estate planning tool, contact A. Traub & Associates. Our experienced Lombard estate planning attorneys are ready to help you and your family plan for the future and give you the peace of mind you deserve. Call 630-426-0196 to schedule a confidential appointment today.

Sources:

https://www.forbes.com/sites/zachconway/2018/01/26/more-than-half-of-americans-dont-have-these-essential-estate-documents-do-you/

https://www.investopedia.com/terms/u/utma.asp