Estate Planning for Minors

How to Name a Guardian for your Child

Naming a Guardian for Your Child

I do not know if it is because people are having children later in life or they are more sophisticated (don’t they go hand in hand?) but they are definitely more responsible than parents of my generation (in the 70’s we didn’t have car seats and people still smoked inside while cooking dinner). The reason that 99% of my younger clients seek me out is to name a guardian for their children. Of course they understand that it is very unlikely that both parents will perish before the children reach 18, but since we do not know the future, we plan for every scenario.

A nominated guardian is the person you choose to raise our children if we cannot. This is usually a close friend or family member who loves the children, has similar values, and can be trusted to act in their best interest. When a parent dies, ideally assets are passed to the children in a trust that can be used to pay for their upbringing. When both parents die before the child reaches 18—with no planning—the passing of these assets to a minor child triggers court intervention, a guardian ad litem is appointed, and the court appoints someone to manage the inheritance until the child comes of age. This can be expensive, time consuming, and intrusive. It is the last thing anyone already taking on the role of caretaker for your children should have to worry about.

Solution for Parents

Best practice is to leave assets in a testamentary trust for the children. A testamentary trust is created only upon the death of one or both parents.  The parent names a trustee or co-trustees to oversee distributions for the child’s benefit. When we draft a Will (or revocable trust) we appoint a guardian to raise the children and a trustee to manage the inheritance. The guardian and trustee can, and often are, the same person. We also detail what age a child can inherit, how the money can be spent, whether there are separate trusts for each child or a common pot trust. The appointment of trustee is done through the ordinary probate process with minimal court intervention. A guardian is appointed through Family Court.

But what if you don’t have the money for a Will or you just want to do something in the meantime? You can nominate a standby guardian for your children using a statutory form signed in the presence of two witnesses. The form is valid for 60 days, after which the guardian must petition the family court for permanent guardianship. Not only can you name a guardian in case of death, but also in case of administration separation and incapacity.

I have started providing my clients with such a form so that the guardian has immediate custody even outside the Will. This does not solve the issue of the child’s inheritance – that involves creating a beneficiary’s trust in the parent’s Wills or Trusts. This is the best legal mechanism and the best way to control the distributions for a child’s benefit and avoid them receiving a hefty chunk of money outright at 18. We change contingent beneficiary forms on IRAs and Life Insurance policies to point toward this trust. This way the children can inherit the assets in their trusts.

I highly recommend you see an estate planning attorney to properly plan for such a contingency, as  we can specifically tailor such provisions to your family’s unique needs and there are complex tax issues involved. In a pinch, though, I have provided a Nomination of Guardian form you can create instantly.

For everything you ever wanted to know about drafting a Will when you have minor children, download my Estate Planning Guide for Parents.

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