Chapter 3 Children

• Library: Estate Planning Basics (Nolo) (2024 Ed.)

CHAPTER 3 Children

Naming Someone to Care for Young Children

Choosing Your Child's Personal Guardian
If You Don't Want the Other Parent to Become Personal Guardian

Naming Someone to Manage Your Child's Property

Choosing How Your Children's Property Should Be Managed........46

The Uniform Transfers to Minors Act (UTMA)
Trusts for Children
Naming a Property Guardian

Naming Children as Beneficiaries of Life Insurance

Tax-Saving Accounts

529 Education Plans
Coverdell Education Savings Accounts
ABLE Accounts for Disability Expenses

Leaving Property to Adult Children

Leaving Property to Other People's Children

In estate planning, the word "children" can have two meanings. The first is "minors"—individuals who aren't yet 18. The second meaning is offspring of any age; parents who live long enough can have children who are in their 40s, 50s, or even older. This chapter focuses primarily on minor children because that's a vital concern for so many parents. It also briefly discusses ways to leave property to a young adult child, when you're concerned that the child may not be sufficiently mature to handle money responsibly. This chapter's final section covers leaving property to other people's children.

Naming Someone to Care for Young Children

Most parents of minor children are understandably concerned with what will happen to their children if the parents die. If both parents are raising the children, this concern usually centers on simultaneous death of the parents. If you're a single parent and the other parent is deceased, has abandoned the child, or is unavailable for some other reason, the worry is what will happen to your child if you die before the child reaches adulthood.

If a child has two capable parents and one dies, normally the other parent has the legal right to assume sole custody. Even if the parents are divorced or never married, as long as both parents are participating in raising their children, this rule presents no problem. But what happens if both parents die? Or a sole parent dies? Or a custodial parent believes the other should never have custody of the children?

First, some legal rules. Every minor must be raised by an adult who is legally responsible for the child's care. If there are no parents capable of handling this responsibility, another adult, called the child's "personal guardian," will be appointed by a court. In your will, you can nominate someone to be your child's personal guardian. If you have young children, this is a major reason why a will is essential.

The person you name as personal guardian can't actually serve as the legal guardian until approved by a court. The judge has the authority to name someone else if the judge is convinced it is in the best interests of the child. This may seem outrageous to you—how could a judge have authority to go against your own choice of the best guardian for your child? The short, legal answer is that children aren't property and can't simply be "left" to someone as a diamond bracelet or an automobile can be. That said, the reality is that if, as is usually the case, no one contests your choice for your child's personal guardian, a court will almost certainly confirm the person you choose. In practice, a court will reject an unopposed nominee only if there are grave and provable reasons to do so, such as a serious criminal background, child abuse, or dangerous self-destructiveness, such as drug addiction.

Choosing Your Child's Personal Guardian

You may well know whom you want to name as your child's personal guardian. For some parents, there may be one clear choice—an adult who is willing to take on the responsibility and would love and care for the child. Other parents have to struggle to decide on a personal guardian. Sometimes two parents don't initially agree on who is the best choice. And other times, both for couples and single parents, there appears to be no fully satisfactory choice. But however you get there, you do need to make a decision—and then resume living with the faith that the person you named will never need to serve. You should always name a successor personal guardian as well, in case your first choice is unable to serve or to continue to serve.

You can name one guardian for all of your children, or name different guardians for each of your children. Your choice will likely depend on the relationships your children have with their other parent, each other, and the potential guardians. If your children are close in age and have similar relationships with family members who are potential guardians, naming one guardian for all of your kids may be a good choice. However, if your children are far apart in age or have strong relationships with different family members, then you may find that it makes the most sense to name different guardians for each of your children. Keep in mind that a judge will make the final decision about what is best for each child. So it may be a good idea to attach a statement to your will setting out why you've chosen the guardians you have. A court isn't required to follow this statement, or even accept it as valid evidence, but a conscientious judge will surely consider it.

EXAMPLE: Janine has custody of her two daughters, aged 14 and 15, from her first marriage, and her son, aged 6, from her second. Her first husband has never taken any interest in or responsibility for the girls. Her second ex, Todd, has been an adequate, though from Janine's view, well below superb, father to their son, and has also tried to be decent to her daughters. Though the three children would like to stay together, Janine reluctantly recognizes that this can't be paramount in her decision. Janine's sister, Brenda, is close to the daughters and Janine strongly believes that she would be a much better personal guardian for them than Todd. But Todd would certainly want and be entitled to custody of their son.

Janine names Brenda as guardian for her daughters. She also names Brenda to serve as successor guardian for her son if neither she nor Todd is alive. Then, she names Todd as successor guardian for the girls. She also attaches a statement to her will explaining why she believes this arrangement is best for her children.

If You Don't Want the Other Parent to Become Personal Guardian

One parent might not want the other parent to have custody for any of a number of reasons. For example, a parent might believe that his child's other parent is dangerously destructive, emotionally or physically. Or, a remarried parent might believe that her current spouse would be a far better guardian for her child than her ex, the child's biological father.

Clearly, one parent shouldn't lightly attempt to deprive the other of custody. But strong reasons may compel a custodial parent to nominate someone other than the child's other parent to be personal guardian. In that case, what happens if the custodial parent dies and the custody issue is presented to a judge? There is no definitive answer. If the other parent doesn't contest the deceased parent's wishes, the court will almost surely follow those wishes. ("Almost surely" is as certain as you ever get when it comes to courts.) But if the surviving parent contests custody, a judge's decision would turn on both the facts of the situation and the judge's own beliefs. Generally, a court won't appoint someone other than a biological or legal parent unless that parent:

• is unavailable
• has legally abandoned the child, or
• is an unfit parent.

It's usually quite difficult to prove that a parent is unfit, absent severe problems such as serious drug abuse, a history of violence to the child, or mental illness.

It's unlikely that anyone except the child's other parent would win custody against your wishes. For instance, if you name your best friend, Betty, to raise your children if you can't, and Betty is clearly a caring adult, it's unlikely that someone else, such as the child's grandmother or uncle, could gain custody over your choice.

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Potential custody fights. If you don't want the other parent to gain custody, discuss the details of your situation with a lawyer who...