Estate planning is important for everyone, but for parents of minor children, estate planning is essential. If the parents of a minor pass away, a guardian of the person will already be required. Without proper estate planning, minor children will need a guardianship of the estate as well to manage the assets prior to attaining the age of majority.
The guardianship process is another court supervised administration, much like a probate of a decedent’s estate. Guardians are appointed by the court for two purposes. The first is for the custody and control of the minor. This person is called the guardian of the person, and he or she will oversee making medical decisions, enrolling the child in school, and ensuring the child’s care is proper. Nominating who you would like to be in this role is critical to ensure the court understands your wishes. The second purpose is for the management of a minor’s assets. Minors cannot hold assets in their own name, so a guardian of the estate is needed. This person will hold assets on behalf of the minor and provide for the minor as needed for his or her health, education, support, and maintenance. If you create a trust with a successor trustee, then the successor trustee can manage these assets for the minor.
Upon reaching the age of majority, which is 18 in California, the guardianship of both the person and estate are ended through a formal hearing with the court. At this point the heir can make decisions for him or herself and hold assets outright.
The aforementioned interaction with the court system, in regard to the financial estate, is avoidable with proper estate planning. The guardian of the estate can be avoided by using a trust to convey assets to children. Under a typical revocable trust, a trustee is designated by the Settlor, or creator, of the trust to manage assets upon the death or incapacity of the Settlor. The Settlor can also designate any distributions for underage beneficiaries to remain held in trust until a certain age or circumstance. This is beneficial to the parent because it may be desirable to hold the property until the child is older than 18 or when the child passes a significant milestone, such as graduating college.
If you are a parent of minor children, or if you are a soon-to-be parent and expecting your first child, please contact Tresp Law, APC to schedule a consultation to discuss these and other reasons why creating an estate plan now is the best course of action.
