Every parent wants to ensure that their children are provided for should something unexpected happen to them while their children are still young. Oftentimes, relatives wish to leave assets to young children, such as their nieces or grandchildren, as well. However, good intentions coupled with poor planning often have unintended results.
Without a will in place, assets are distributed according to Minnesota Intestacy Statutes. These statutes direct what relatives will inherit, and in what order, from your estate. If no relatives can be located, your assets go to the state. Where the deceased person has children, there must be a guardianship proceeding to determine who will care for the minor children. These proceedings may move slowly, and can become very expensive. Furthermore, the court makes the determination as to who is best to care for minor children – a decision arguably best made by the parents of the minor children.
By having a will in place, you can name your minor children and determine who the guardian will be to take care of them. However, the court still becomes involved regarding the assets and their management. If assets are passed on without the creation of a custodial account or trust, the probate court will need to appoint a guardian to manage property/assets of the minor children. If the assets received by the minor are greater than $10,000, the court must approve the establishment of a custodial account.
A better option is to set up a trust for you children in your will, and name someone as trustee to manage the inheritance instead of the court. With this option you can also select when your children will inherit the assets. By doing this, you can ensure that your children will not receive substantial assets, which they may not be able to manage, at the age of 18. Trusts can pay out in different increments, and at different ages. One drawback is that the trust cannot be funded until the will has been probated – a process that takes time and may also reduce the assets available. Another drawback to this approach is that it does not go into effect should you become incapacitated, and will only become effective after you have died.
Another option is to establish a revocable living trust. With this approach you are able to select the person (trustee) who manages the inheritance for the minor recipients. Each child’s needs can be accommodated, just as you would choose if you were there to make the decision. Assets that remain in the trust are protected from the courts, from irresponsible spending, and from creditors.
Schromen Law, LLC provides legal advice regarding what approach to your estate plan the unique needs and concerns of your family. Once the best approach is chosen, your personalized documents will be drafted and explained thoroughly so that you and your family know how to best utilize them should the need arise.
The material contained herein is for informational purposes only, and is not intended to create or constitute an attorney-client relationship between Schromen Law, LLC and the reader. The information contained herein is not offered as legal advice and should not be construed as legal advice.