Many people mistakenly think that planning for children only applies to minors. Not so! While minor children certainly present unique planning issues, it is just as important to think through the needs of your adult children as well. Some of the more important considerations are:
Guardian for Minor Children:
• Do you really want to name a married couple? If they later divorce, both will technically still be entitled to remain guardian. Is that really what you intended, or would it be better not to name the spouse? Even if not named, a spouse can be given authority by the guardian and can help raise the children. But the guardian remains the boss, not the spouse. Delegated authority ends whenever the guardian says it ends.
• Did you know that you can name one person to be in charge of raising your children and a different person to be in charge of their inheritance? Most parents do not know this and struggle to decide upon someone that might be a good choice for both jobs. That’s often difficult to do because most people are better suited to one task or the other.
Encouraging Values and Behavior:
• Most folks know that they can setup an inheritance to pay for college. But did you know that you can specify what degrees would be acceptable, what minimum grades the student must attain to keep receiving assistance, and even what types of education can be supported. College only? Dance lessons? Golf? Travel abroad? You can be as specific or as general as you care to be.
• An inheritance can also be structured to encourage certain behaviors or achievements. If you were still here, would you encourage college? Then how about providing for a nice monetary gift or new car as a gift when the person attains that first degree? It’s like a carrot, hanging out there and encouraging progress. You can use your estate plan to encourage development of charitable giving, attaining certain skills, starting a business, or experiencing things that you consider to be important or worthwhile.
• Planning for fiscal responsibility is an area often overlooked. Without proper planning, a minor child will receive the inheritance outright — no strings attached — the moment he or she turns 18. Imagine all the things that could wrong with that! A structured estate plan can avoid this and instead, for example, provide for the inheritance to remain in trust and be given out to the young person in increments over time. This provides the heir with an opportunity to learn to manage money, while retaining the bulk of the inheritance securely during the learning process.
Addressing Special Needs or Circumstances:
• An unplanned inheritance can be disastrous for anyone receiving government benefits for a needs based disability, such as SSI or medicaid (Medi-Cal in California). Receiving an inheritance outright can result in a total cancellation of benefits! With proper planning, this can be avoided and a trust fund can be established to provide for things not covered by government benefits.
• Have a loved one with a substance abuse problem or other challenge? An unfettered inheritance may be squandered or even used to carry on life threatening activities. Adequate planning can address this situation and allow others to control the inheritance, provide for rehabilitation services, medical care, and necessaries of life until the heir’s situation has improved.
When it comes to your children, your estate planning should not stop when they are no longer minors. A bit of considered thought can open the door to all manner of planning possibilities.