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Planning Your Children's Future - Guardianship, Wills & Inheritance
Your Children's Future
Why should I plan for my children's future now.? I do not need to have wills for my children. I am healthy and I do not foresee any problems in seeing my children through their education and adulthood.
Who Gets Custody of Children If Both Parents Die?
Your children’s future will depend on your planning. Should you and your spouse die unrepresented, with no appointment of guardians, insufficient funds to support the children through tertiary education and into adulthood and no arrangement for managing their inheritance; the children will be at mercy of others. Their future is dependent on other people’s willingness to help. Tragedies like these are common in our society.
We think that we are healthy and our children's future are secured. However, anything can happen and can change the whole perspective that may not be so desirable.
Your Children Can End Up in Foster Homes
Without proper provision in wills and estate planning, your children may end up growing up with relatives whose lifestyle you may not approve of, or worse still, they may end up in foster homes. Without sufficient money, your children’s guardian and their children may resent them for making them skimp on extras and for sharing their bedrooms and toys.
You may also end up having people you would never trust managing your children’s inheritance. In short, your children could be in a lifelong nightmare, always wondering if their parents really cared for them at all.
If you have arranged an estate plan or wills for your children, then these issues may not arise.
Why it is Important to Have Wills for Your Children
Wills and estate planning are especially challenging when it involves minor children or children with special needs due to the following needs:
For Your Children's Financial Needs
In most cases, your children would not have income earning capabilities and are in total financial dependence on you and your spouse. Without proper financial arrangements, they are very much subject to the mercy of relatives, the government and the public.
For Your Children's Physical Needs
Minor children need extra physical care to carry out their daily activities. Money only, without special arrangement of physical support, may not ensure a proper care for your children.
For Your Children's Education Needs
How your minor children will be raised and by whom, are equally important concerns. If you are not around, your children’s future is very much dependent on the person appointed to raise them.
If you do not have wills for your children, your estate’s distribution will be according to the law. However, the laws cannot evaluate the special needs of your minor children. As parents, you and your spouse are the best people to judge the extent to which your loved ones need support and care.
Estate and Wills to Safeguard Your Children's Future
So how do you provide for your children’s welfare should something happened to you or/and your spouse? The following are five actions plan for you to consider when planning your will to safeguard your children's future:
1. Guardianship for Children
If you predecease your spouse, you can assume that he/she will automatically become your children’s guardian. However, provisions are still necessary in the event that both you and your spouse die together. If you are a single parent, the need to appoint a guardian is even more obvious.
In your absence, the guardian is an important figure for your children. He or she will make all the major and minor decisions you would have made. Name the person you wish to be the guardian of your children in your will. If you do not appoint one, anyone who is interested can apply for the position. The court must then decide without the benefit of your opinion, who will be the best person to raise your children. Legally, you can appoint co-guardians. However, this is normally not encouraged, as there could be a possibility of dispute among the guardians on various issues in bringing up the children.
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Choosing a Guardian
When you choose a guardian, ensure the followings are satisfied or ask yourself these questions:
- The prospective guardian must be an adult aged 21 years and above
- Does he/she has the time to take up the challenge?
- The prospective guardian shares a genuine concern for your children’s welfare and you have confidence in this?
- Does the prospective guardian share similar beliefs and values as you and your spouse?
- Would your children have to move far from their current environment?
- Is the prospective guardian physically able to keep up with your children’s daily activities?
- If you do not leave enough estate to raise the children, can the prospective guardian able to maintain them?
2. Trustee for Your Children’s Inheritance
It is important to appoint a trustee to oversee your children’s inheritance in your absence. You can use your will to name a trustee who will handle money or property your children will inherit when they attain the age specified. If your children are already over this age at your death, the trust will not come into being; the property goes straight to your children.
You can appoint your children’s guardian as the trustee for their inheritance as well. However, it is better to appoint a different person as the trustee. Naming a separate person relieves the suspicion that the guardian may not be using the money in their children’s best interests. For example, you may feel that your sister would provide the most stable, loving home for your children, but you do not have much confidence in her abilities as a financial manager.
Perhaps you have a brother who cares about your children, and would be better at dealing with the economic aspects of bringing them up. However, in most cases, the executor and trustee can be the same person. This is usually a good idea because it eliminates the trouble of transferring the estate from the executor into the hands of the trustee.
Choosing a Trustee
Married couples usually name their respective partners as a trustee for the children. Naming your spouse as the trustee is normally a good idea, but you may need to consider a few things. Your spouse may be emotionally drained upon your death, hence taking on the responsibilities of trustee and executor may be too much of a burden. If your spouse is not financially literate, he or she may be susceptible to an unscrupulous relative or other people offering risky investment opportunities. If you do not want to appoint your spouse as the trustee, you can choose a brother and sister or a trusted friend.
Do not simply appoint an adult child as a trustee for the other minor children based merely on his gender or because he is the eldest. Appoint the child who has the time to do the work required, has common sense and, most important of all, gets along well with the others. All too often, inheritance settlement and management after the death of parents can drive the children apart for life.
Unsure Who to Choose?
If you are having a hard time choosing someone, you can consider professional trustees. The advantage is that they are accountable by law and always around when you need them. The disadvantage is that your estate has to pay for the professional charges.
The trustee must act in the best interests of your children and follow your written instructions. Generally, the trustee can use the trust money for your children’s health, education and living expenses. When the children reached the age specified in the will the trustee ends the trust and transfers the balance in the trust to your children.
In the situation whereby the appointed executor and trustee predecease you, the court has to appoint an administrator or new trustee. This is why it is important to appoint at least one substitute executor and trustee for your estate. A substitute executor and trustee are also important just in case the first choice of executor and trustee changes his or her mind and is not willing to accept the responsibility.
3. Does Your Child Need Special Care?
If you have minor children or children with special needs that require extra financial support, make sure your estate has sufficient liquidity to pay the bills. Get your estate planner to perform a financial needs analysis to find out how much is required.
There is nothing worse for your children then living in an environment where there is resentment because they have become an added financial and physical burden on their guardian’s family. It is important to ensure that you have provided sufficiently for their living expenses, education, hobbies and medical expenses.
If your child has special needs or disability that makes it difficult for the guardian to take care of them, then ensure sufficient money to cater for those needs.
4. Decide When is the Right Age to Distribute Your Children’s Inheritance
In most countries, minor children are legally capable of holding property upon reaching the age of 18. At this age, a child is only starting his tertiary education and may not be ready for the responsibility of managing and investing money.
Becoming a legal adult does not automatically make a person responsible and mature enough to manage money. Unless there is some special reason, it is better to leave the fund in a trust. You have the choice of releasing the fund at a later age. For example, when they reach 25 or you may want to release it in stages, one-third at 21 and the balance at 25.
5. Review Your Wills and Estate Planning
Estate planning involving minor children is always subject to changes because children are growing every day. As they reach different stages of adolescence, the guardian named in the will that seemed perfect three years ago might not be the right candidate anymore.
Keep your estate plan flexible and review it annually. Your estate planning should reflect all the changing needs of minor children, and anticipate and address potential problems.
What Happen if there's Insufficient Inheritance for a Guardian to Apply
In some countries, there are agencies to help you, as a guardian when faced with this situation. Do a search on which government agencies in your country that will provide these facility.
Do Your Children's Wills and Estate Planning Now
When you die, your children will miss you greatly. What you have done or failed to do may make or break their future happiness.
According to Stephen R Covey, reactive people make love a feeling, but proactive people make love a verb. Love is something you do and the sacrifices you make. It is a value that is materialized through loving actions, Put your love into action now and start wills for your children and other loved ones.