Estate Planning Blog

Estate Planning for Parents with Young Children Key Things to Consider to Protect Your Loved Ones

Estate planning for parents with young children presents a variety of challenges and opportunities.  Here is a series of questions and answers to help address some of the key issues involved.

If I have children, do I need to make special provisions for them in my Will?

If you have children, there are two key things to think about when drafting your Will.  The first is who you want to put in charge of managing the assets that you leave to them.  The second is who you want to act as their guardian.

What are the options for managing the assets my children receive?

The two most common options are to leave the assets to your children in trust or to direct that they be placed in a Uniform Transfers to Minors Act account.

How would a trust for my children work?

Every child’s needs are different based primarily on their maturity level and capabilities, and the trust provisions can be tailored to address those factors.  For example, you can choose to have trust distributions to or for the benefit of a child on a monthly basis.  As an alternative, you can choose to have percentages of the trust funds be distributed at different ages, i.e. the first third at age 21, the second third at age 25, and the final third at age 30.  In addition, you can also choose to simply leave the discretion as to distributions to your trustee to make as they see fit.  What type of trust structure is best can be determined by consulting with an estate planning professional.

Who would the trustee be and what do they do?

The trustee would be someone you name in your Will to manage the trust you leave behind for your children.  People generally choose a close family member or friend to act in this capacity.  You can also choose an institutional trustee, such as a trust department at a local bank.  The trustee has the obligation to responsibly manage and invest the trust assets.  They must also make distributions to or for the benefit of your children pursuant to the terms of the trust.

What is a Uniform Transfers to Minors Act account?

A Uniform Transfers to Minors Act account – or UTMA account for short – is an account that can be set up at a local bank with a named custodian for the benefit of a child.  This is a useful way to leave money to a young child, without the necessity of setting up a trust.  The custodian, similar to a trustee of a trust, has the obligation of managing the account funds and may make distributions from the account to the child or for the child’s benefit.  When providing for an UTMA account to be set up in your Will, you can direct that the account be paid out to the child either at the age of 18 or 21.  An UTMA account is a useful alternative to a trust, if the amount of money flowing to your child is a relatively smaller amount, i.e. $30,000.00 or less.

How does the appointment of a guardian for my children work?

If you pass away and there is no surviving parent to care for your children, then you can name your choice for a guardian of your children in your Will.  The named guardian will have to seek appointment from the court as guardian, but the court will likely give strong weight to your preference.

Does the guardian control the assets I leave to my children in my Will?

If you leave your assets in trust, with a named trustee, or to an UTMA custodian, the guardian of your children will not control those assets – unless you name the same person to be guardian and trustee or custodian.

Should I make the guardian and trustee/custodian the same person?

That depends on the individual that you are choosing.  In some cases, you may choose someone as guardian who is a close family member who you know will care for your children like they are their own, but that person may not be good at managing money.  In that case, you may want the trustee or custodian to be someone else who has the appropriate financial acumen.

How do I ensure there are sufficient funds to take care of my children?

Obtaining term life insurance is an excellent way to ensure there are sufficient funds to take care of your children, if you pass away when they are young.  The premiums are generally very affordable for appropriate coverage, if you purchase the policies when both you and your children are young.  You can then make your spouse the primary beneficiary if you pass away, and you can make your estate the secondary beneficiary.  If your spouse predeceases you, then the money will flow into your estate and fund the trusts or UTMA accounts you established in your Will.

What other issues are relevant to estate planning with young children?

There are a variety of other issues to consider when estate planning for parents with young children.  For example, if a child is disabled, there may be a need to establish a guardianship by the parents of that child which will continue into the child’s adulthood.  There may also be a need to establish a special needs trust, which will provide support for the child without jeopardizing their eligibility for governmental benefits.  These issues and others can all be addressed with an experienced estate planning professional, in order to determine what options are best for your family.

Matthew J. Dorsey, Esq. is a Shareholder with O’Connell and Aronowitz, 1 Court Street, Saratoga Springs, NY. Over his twenty-six years of practice, he has focused in the areas of elder law, estate planning, and estate administration. Mr. Dorsey can be reached at (518)584-5205, and

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