Approximately three-fourths of Americans do not have a basic will. Many of the same people also have children under the age of 18, which highlights a significant misconception about estate plans: they can accomplish much more than just handling financial assets (such as money, accounts, and property).
One of the most essential functions of an estate plan for parents of minor children is the ability to provide specific guidance on how their children will be cared for and who will care for them in the event of the parents' passing.
To account for all emergency contingencies about you and your children, your estate plan should form a comprehensive safety net that addresses your children’s care needs and protects them from the unthinkable.
As parents, we instinctively strive to shield our children from harm and set them up for success.
While we cannot predict the future, we can prepare for it. Estate planning is a crucial step in this preparation, especially when minor children are involved. It is not only about distributing your money and property after your death; it is also about establishing ways to care for your children if you can no longer do so.
Your death or incapacity (inability to manage your affairs) from a sudden illness or accident is a situation that you would likely rather not think about, but must consider in preparing for worst-case scenarios that could lead to a court deciding who cares for your child.
Data on parental mortality is sobering, 44.2% percent of minor children have lost at least one parent. If you wait too long to create your estate plan, it could be too late. More than any other reason, Americans cite procrastination as the reason they do not have an estate plan. Procrastinating on creating your estate plan could mean it will not be there when you—and your children—need it.
To safeguard your children’s future, three estate planning tools are essential: a will, a power of attorney for minors, and a standalone nomination of guardian.
A will is a cornerstone of any estate plan, but it takes on added importance when you have minor children. Your will outlines your wishes regarding the distribution of your money and property after your death. It also allows you to do:
A power of attorney for minors, sometimes called a standby guardian or a similar term, depending on the state, is a legal document that empowers a chosen individual (your agent or attorney-in-fact) to act on behalf of your minor child. This person steps in to decide on your child’s care if you become incapacitated or unavailable.
The power of attorney can grant the agent broad authority to handle various aspects of your child’s life, including:
Although the power of attorney grants the agent significant authority, there are limits to what it permits. The agent cannot consent to the child’s marriage or adoption. Additionally, many state laws impose expiration dates on these documents (e.g., six months, one year), so it is essential to review and update them regularly to ensure their continued validity.
While a power of attorney addresses temporary situations, such as short-term incapacity or extended travel, a standalone nomination of guardian document focuses on the long-term care of your children in the event of your death or incapacity.
Without a designated guardian, a court will decide who cares for your children. The guardianship process can be lengthy and uncertain, and may result in the appointment of a caretaker you would not want to have custody of your children.
Name a guardian in your will. However, a standalone document that also names a guardian (if allowed in your state) offers the added benefit of being easier to update than a will, which often requires more formalities and can take longer to change. https://www.childwelfare.gov/resources/standby-guardianship-maryland
In addition to a power of attorney, nomination of a guardian, and a will, parents of minor children may consider establishing a revocable living trust to hold their accounts and property during their lifetime and distribute them after their death.
You (the parent) maintain control of the accounts and property in the trust while you are alive as the current trustee. You can change the trust’s terms as needed because you are the grantor, and this trust is revocable. A revocable living trust can help avoid probate and give your children faster access to the resources they need. You can also specify how and when your children receive their inheritance, name a successor trustee to continue management of the trust if you suffer incapacity, and provide financial support for the guardian, further synergizing your estate plan.
These three estate planning tools are not interchangeable; they are complementary and designed to work together to address immediate and long-term needs in a range of potential scenarios.
Imagine a scenario where both parents are in a car accident. One parent dies, and the other is severely injured and temporarily incapacitated. The agent named in the temporary power of attorney or delegation of standby guardian immediately steps in to care for the children temporarily.
If the injured parent passes away, the designated guardian (who may be the same person as the agent under the temporary power of attorney) named in the will or standalone document can provide the children with a stable, permanent home. The will can be structured so the children’s inheritance is managed through a trust that specifies how and when their inheritance should be spent and distributed.
Failure to have these estate planning tools can lead to complications and unintended consequences for your minor children. For example:
Parents should understand that they can only nominate a guardian for their child, not legally appoint one; the court has the final authority to decide, though it gives significant weight to the parents’ nomination.
Suppose there is evidence that your chosen guardian is unfit or unable to provide proper care. There, the court may appoint a different guardian in the child’s best interest, even if it goes against your wishes. A family member may also contest your guardianship choice, or your first choice of guardian may be unavailable.
These outcomes are unlikely, but since they could undermine your wishes, there are additional steps you can take to minimize the risk and strengthen your case.
Each part of an estate plan has a role to play, but they work best when considered as part of a larger plan that addresses significant issues, such as the well-being of your minor children.
A will, temporary power of attorney, and a standalone guardian document are not interchangeable; they are complementary. Incorporating all three into your plan, alongside other strategies such as a revocable living trust and a letter of intent, addresses the immediate and long-term needs of your minor children in any eventuality.
If you have minor children, estate planning is a necessity. Do not leave your children’s future to chance. Consult with the attorneys at Altman and Associates at 301-468-3220 or through our contact form to create a multipoint plan that protects you and your family.
