Handbook
• YOUNG CHILDREN
With young children your major concern is usually the death, perhaps
simultaneous, of both parents. If this were to occur, who would raise the children
and what is the best legal method for managing any property you leave them.
(See the section on The Role of Insurance if you have no property.)
As previously discussed, you should name your children’s Personal Guardian in
your Will. Otherwise, the Court will make the decision appointing the Personal
Guardian without your valuable and usually respected input. The Personal
Guardian will have custody of and raise your children.
Since minor children cannot own property outright beyond a minimal amount, you
will have to decide how the property you leave them will be managed. There are
three major ways to leave property to a child or young adult.
The worst way is to have the Property Guardian manage the property. (The
Property Guardian is usually the same person as the Personal Guardian named in
the Will.) Having a Property Guardian is usually not a good idea because a
Property Guardian is closely supervised and restricted by the Court. This usually
translates to greater regulation, reporting, paperwork and expense. Also, a
Property Guardian must turn over the property to the child when the child reaches
18. (Many people would consider 18 to be too young an age for a child to be
managing his inheritance.) In addition, since the Court is supervising this property
because it is distributed through your Will, this means that you also did not avoid
probate on this property.
There is a much better solution. Your property can first be put in a Revocable
Living Trust to avoid probate. If something should happen to the parents, the
property from the Revocable Living Trust would transfer either over to a Child’s
Trust or to the control of a Custodian under the Uniform Gifts to Minors Act.
Both these alternative methods for managing your children’s property allow for
greater control and flexibility, and are much preferred over a Property
Guardianship. Generally speaking, if the amount of property is limited, it will be
sufficient to transfer it under the Uniform Gifts to Minors Act. If there is more
property and longer supervision of the property is necessary, it is better to create
a Child’s Trust.
John and Mary had never planned for how their property would be managed for
their children. The Court decided on Mary’s parents to also be the Property
Guardians. Mary’s parents had to hire an Attorney to help them understand and
satisfy all the Court’s rules and regulations. There was also a lot of paperwork
and reporting requirements they had to meet. In addition, although Sally and
Michael wouldn’t be ready to handle their inheritance when they turned 18, they
would be legally entitled to it.
Note: If you do not plan for either the Uniform Gifts to Minors Act or a Child’s Trust,
you will get the least preferred and most disadvantageous method by default, a
Property Guardianship.
