Minor children are a vulnerable population.
Children need trustworthy and caring adults in their lives.
Even adolescents who just want to be independent rely on others for food, safety, shelter, love, and guidance.
Often these “others” are the parents of the children, but not always.
According to a recent The News-Enterprise article titled “Children need special attention in estate planning,” sometimes both parents die and leave their children orphaned.
Although the hope is for this to not happen, it is important to be prepared for the possibility of such a loss.
Hope is never an estate planning strategy.
There are specific additional estate planning considerations for those with minor children.
One consideration is how to distribute assets.
Depending on how the inheritance is arranged, there may be tax consequences.
Work with an experienced estate planning attorney in your state to determine who would be subject to federal and state estate taxes, or even state “inheritance” taxes.
Regarding the latter, neither Kansas nor Missouri has its own estate tax or inheritance tax.
Did you know minor children cannot inherit assets directly?
If there are multiple children and each is provided a fraction of the estate, a “common trust” may be used or the inheritance may be specifically allocated.
With a common trust, the property is held in one trust rather than divided into separate shares.
Consequently, the trust assets are used for the children as each has need.
When the youngest child reaches a specific age, typically the trust will be divided into separate shares as outlined by the trust instructions.
These shares are then managed for each beneficiary.
With any inheritance, create clear instructions for the trustee to follow.
For example, you should include how much income and principal should be granted to each minor child and the schedule for receiving disbursements until the beneficiary can take full control at a certain age.
Often trusts for the benefit of minor children are directed to be used for health, education, maintenance, or support.
These are broad “ascertainable standards” that can give the Trustee helpful discretion.
For your wishes to be followed, you must outline them in your trust documents.
Perhaps you want to make a trust the beneficiary on behalf of your minor children, then you will still want to include provisions for the children in your instructions to your executor or trustee.
If you choose to leave assets to your minor children through a last will and testament, remember everything recorded with the probate court is a matter of public record.
Information about what you leave to your children will be accessible by the general public.
As a result, predatory family members or scammers may target your children.
A revocable living trust may provide a stronger line of defense and more privacy for your minor children and the assets.
In addition to nominating a guardian for your minor children, you will also want to name a conservator or trustee to manage their finances.
These people do not have to be family, but they should be trustworthy.
Discuss your goals and wishes for your minor children with your estate planning attorney to create a plan to best meet the needs of your children.
Reference: The News-Enterprise (Sep. 10, 2022) “Children need special attention in estate planning”