Planning for Minor Children
Serving Families and Individuals throughout Huntsville, Alabama and the Surrounding Areas
Are you the parent of minor children? If yes, then they are your most valuable treasure. Do you have a plan for their care should something happen to you and their other parent?
Would you rather select the guardians (i.e., back-up parents) yourself, or let a probate judge make the selection without your input? You can only do this through proper legal planning.
There are two critical choices commonly faced by parents of minor children. First, who will take care of my minor children if I cannot, and second, who will manage their inheritance? In Alabama, if you do not have the proper planning to handle the money that minors receive, a Conservator will be appointed. The Conservator must provide a bond (Insurance policy) in the amount of the funds to be managed, request permission from the Court for expenditures for the children and provide an annual accounting to the Court. Do you want those legal costs to be spent out of the inheritance annually?
Guardianship: If you are separated, divorced or never married to the surviving biological parent of your shared minor children, then that parent usually continues to be their guardian. You will want to make careful choices regarding guardianship for your minor children to protect them and to guarantee that they are raised the right way.
While every family situation is unique, here are some general practical pointers to consider when selecting guardians for your minor children:
- Select guardians who share your faith, values and life priorities; and already know your minor children;
- Appointing a specific person, not just a couple, in case that person predeceases or they divorce;
- Make sure your legal plans provide for the compensation of the guardians, or at least that the inheritance is available to cover all legitimate expenses incurred when rearing your minor children; and
- Obtain permission of the selected guardians before appointing them in your legal instruments.
Conservatorship/Trustee: Great care must be taken when selecting a fiduciary to administer and distribute the inheritance. A fiduciary is the person or institution legally responsible for the financial affairs of another. Fiduciaries are held to the highest standards of care and loyalty in this role.
Who is appropriate to manage any inheritance left upon your death? Is the other biological parent the one you want them to control the inheritance you leave behind, too?
There are three common options when it comes to financial fiduciaries, each with its unique advantages and disadvantages.
Option 1: Appoint trusted family members or friends. They probably know the strengths and weaknesses of your loved ones. Family members may not charge to their services to oversee the inheritance. Be aware that this is additional work which may be difficult given distractions with their own life and financial responsibilities. Also, the sympathy of a family member may make it difficult to say “no” to an irresponsible heir.
Option 2: Appoint a professional fiduciary, such as an institution (e.g., a trust company) or an individual (e.g., your CPA). Interestingly, the upsides and downsides are the opposite of Option 1.
Door #3: Use more than one fiduciary for the best of both worlds. In short, one appointee knows the strengths and weakness, can manage everyday matters, and has a partner fiduciary who can be the “bad guy” if needed. The second fiduciary (professional) shoulders (and is rightfully compensated for) the management of the inheritance including investment, accounting, tax and legal details.
As you can see, selecting guardians and fiduciaries is essential for the physical and financial well-being of your minor children. Few decisions in life are more important. If you do not make these choices by planning your estate, the Court will step in. Only you can make these decisions through proper estate planning.