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The "bare bones" approach

There are different levels of estate planning. At the most basic level, people need to leave directives as to who will care for their children, in the event they are no longer able to do so themselves. Some states break custody of a minor into two categories; physical custody of the child is the responsibility of the "guardian" and custody of their financial resources is handled by a "conservator." The most basic level of estate planning is to name those people. There can be a different person for each role, and some people like the "oversight" that this type of setup can provide. Of course, you need to consider the people involved, their personalities and the fact that the person or persons physically caring for the child are going to be beholden to the conservator for financial assistance. You want to choose people who can work together to further your objectives for your child. You also want to name alternate parties in case your first choice is unable to act or continue to act.

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Are there other concerns?

For people who have relatively little in terms of assets, and if there are no special needs for the children, then a Will (or in some states, any other written document that directs nomination and appointment of guardians and conservators), may be all that is necessary, as a basic level of planning for the child(ren). You never want to name a minor child as a direct beneficiary of an asset. I have been involved in numerous cases where a child was named as a beneficiary of life insurance, and the courts would not allow ANY access to the money for ANY reason, until the funds were turned over to the child in a lump sum, when they turned 18. This is generally not what most people want. In cases where there are significant assets, then additional planning usually makes sense. Bear in mind that you know your children better than anyone else and you probably have a good idea how they would respond to receiving a sizable inheritance.

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The next level - What to do if there are significant assets

If there is a substantial estate, or if the child(ren) in question are not capable of dealing with a large inheritance intelligently if it is handed to them at the age of 18, then additional planning is called for. I am particularly fond of using Revocable Trusts for situations like this. People usually consider trusts because they wish to avoid probate administration. While this is one potential benefit of trusts, a far more important benefit is the ability to stagger and control the distribution of trust assets to minors. You can exert a great deal of influence and control over your children's access to the inheritance you leave them. I have had clients state that their beneficiaries do not receive their entire share of the trust until they turn 50 years old. I have had clients that dictate that if the child does not attend college, that 90% of the assets go to charity. The point is, trusts provide a great deal of flexibility and control in planning for distributions to minors.

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Who's the Boss?

You will need to give careful consideration to the people you place in charge of the trust. The Trustee should ideally be someone who knows you well; someone who knows how you handle your finances and how you would want your finances to be handled, if you were unable to do so for yourself. You also want someone who knows and can relate with your child(ren), but not someone who can be controlled by the child or influenced to bypass your expressed instructions. You should exercise extreme care when naming an older sibling as a Trustee. You are placing that person in a potentially very awkward position since they will have control of their sibling's money, and will face possible resentment if they deny them access to the funds. You will also want to make special provisions for children that have addictions or other problems that would affect their ability to deal with the trustee in a civil manner. In some cases, an attorney can be named as a "disinterested third party."

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Final considerations

Children are not *entitled* to an inheritance, in spite of their assumptions to the contrary. You are free to use or leave your money any way you see fit. i have seen many cases where parents use estate plans as a way of "sending a message" to their children. Sometimes this works and sometimes it tears families apart. What is right for your family is something that you are in the best position to determine. As an estate planning attorney, I am happy to customize estate plans in any way that the client feels is best for their family and their situation. It is very important that you tell the people you place in charge know where your important records will be kept and that they have access to them. No matter how wonderful your estate plan is, it will not do your family any good if no one can find it. It is also important, as the children grow, to discuss these matters with them. Open communication is the best way to insure your wishes will be carried out.

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One last comment about special situations - Planning for blended families

Trusts are an even more essential planning tool when blended families are involved. In such cases, it is a good idea to have a separate trust for each spouse, and to have substantial assets titled in each trust. That is the best way for you to protect your children against the uncertainties of the future.One client experience from the past will illustrate this. A widower with one child signed a Will leaving everything to his daughter. He then remarried. He told his daughter and his new wife that everything was taken care of and that he intended the daughter to receive his entire estate, except for a couple of joint accounts with the wife. The father died. The wife elected to "take against" the Will, meaning she received over half the estate. Five months later, the wife died. More than half of the estate that was supposed to go entirely to the daughter passed to the surviving children of the wife, (who had never met their new stepfather!) Timely estate planning eliminates these cases!