In 1984, Congress issued a resolution, signed by President Reagan, establishing March 21st as National Single Parent Day: a day devoted to recognizing the dedication of single parents, who make self-sacrificial efforts to care for their children’s needs, and encouraging family members, friends, and communities to help provide an optimal environment for their children. As a single parent, you should feel proud of your efforts to nurture and care for your children. Here are a few additional things you can do to provide for your children’s future that you may not have considered.
If your children’s other parent is willing and able to care for them if you pass away unexpectedly, he or she will likely be given physical custody of the children and responsibility for their care. In the case of single parents, however, the other parent often may not be able or willing to take on this role. This is why it is crucial for you to name a guardian who will step into your shoes to provide day-to-day care for your children if something happens to you. If you do not name a person you trust, a court will step in to appoint someone. Because the person the court chooses to be your children’s guardian may not be the person you would have chosen, it is vitally important that you designate this person in advance. You can name a guardian in your will (and in some states, a separate document can be used specifically for this purpose): Although the court will still have to appoint the guardian, the court will typically defer to your wishes.
In making your decision, there are a few factors to keep in mind: Does your chosen guardian share your values and parenting style? Will your chosen guardian require your children to relocate? Does your chosen guardian have the energy and stamina needed to care for your children? Do they have the time to be an involved caregiver? Do you want more than one guardian to care for multiple children, or do you prefer for the children to stay together? It is important to weigh the importance of these considerations in making your decision.
If your children are minors, you can establish a custodial account to hold an inheritance under a law called the Uniform Transfer to Minors Act or the Uniform Gifts to Minors Act. If you do not appoint the custodian, the court will appoint someone to control and manage your children’s inheritance until they reach the age of majority. This is necessary because minors legally cannot own money or property on their own. A custodian will manage the funds in the account for the benefit of your children, but the downside is that when they reach the age of majority (18-21 years old depending on applicable state law), the funds will be distributed to them in a lump sum. At that point, they can spend the money as they wish, which may not be optimal for a young person who is not yet mature enough to make prudent financial decisions. In addition, any present or future creditors could try to reach your children’s inheritance to satisfy their claims.
A trust is often preferred over a custodial account because it is more flexible and can be designed to protect the funds against your children’s future creditors and their own imprudent spending. You can name someone who is adept at handling money to manage and disperse the funds for the benefit of your children if you die before they reach adulthood—or the age you have decided to the funds should be distributed to them. This can be the same person who will act as the children’s guardian, or a different person if you do not trust the guardian (e.g., an ex-spouse) to handle the money you have left to your children.
If you would like to set up a trust that can be used to manage your money and property for your (and your children’s) benefit if you become too ill to do it yourself, you can establish a revocable living trust with yourself as the trustee. This type of trust will remain in effect if you pass away, and the successor trustee you have named can continue to manage the funds and make distributions for the benefit of your children. The successor trustee can also step in to manage and distribute the funds for your benefit if you are unable to do so. An often less preferable option is to include provisions in your will for the establishment of a trust at your death. This type of trust will not help if you become disabled because it will not go into effect until your death. In addition, it will not be funded until your will has been probated, a process that may be expensive and time-consuming. Also, by creating the trust through your will, the management and distribution of funds may also be subject to ongoing oversight by the probate court.
The trust terms can specify the purposes for which the trust funds can be used, how and when the trustee should make distributions, and, if you so choose, the age at which you would like the trust funds to be fully transferred to your children—which does not have to be at the age of majority. You can choose the type of distributions you believe are best for your children: Some parents give the trustee the discretion to make distributions for specific purposes, such as the children’s health, maintenance, education, or support, or even for a down payment on a house or to provide funding for the child to start up a business. Others give the trustee complete discretion in making distributions for the benefit of the children. The timing of distributions, which can be designed to meet your particular goals, can also be spelled out in the trust.
If you have more than one child, you can specify whether the distributions should be for equal amounts or if a greater percentage of the money in the trust should be distributed for the benefit of certain children, e.g., children with special needs or younger children who did not get as much financial assistance from you while you were alive. In addition, you can address specific issues that may be of concern. For example, you can indicate whether you would like a home you own to be sold, or if you prefer for the children’s guardian to move into the home so they will not have to relocate. If your home is not sold, the terms of the trust can also indicate who will be responsible for paying the real estate taxes, utility bills, and maintenance expenses. The home is a particularly complex issue to consider, as there are often emotional ties and memories connected to it, as well as ongoing costs, and frequently, a mortgage. As experienced estate planning attorneys, we can help you think through the best course of action for your family.
If you have named someone other than a grandparent (your parent) to be your children’s guardian, it is important to specify in your estate planning documents whether you wish the grandparents to be able to visit with your children.
While you are living, it is your fundamental constitutional right to determine whether--and how often-- your children will see your parents (their grandparents). However, when you pass away, grandparents may have a right to see your children. Every state has enacted a grandparent visitation statute, and they vary regarding their permissiveness or restrictiveness. Some statutes only allow grandparents to obtain a visitation order when the children’s parents have separated, divorced, or one or both of them have died. Others are less restrictive1 and allow grandparents to obtain a visitation order even if the parents are still married and are both still living. What both types of statutes have in common is that they both require visitation not to interfere in the parent-child relationship and to be in the best interests of the child.
As a single parent, you can gain substantial peace of mind by creating an estate plan that ensures your children will be properly cared for—both physically and financially—in the unlikely event that something happens to you while they are still too young to take care of themselves. Please call the Anderson, Dorn & Rader office at (775) 823-9455 to schedule a consultation.
1 Some of these less restrictive statutes have been found to be an unconstitutional infringement on the fundamental right of parents to control the upbringing of their children.
If you have any children under the age of 18, it is important that you at least have a Last Will and Testament ("Will"), including provisions regarding guardianship of your children, should anything happen to you. Legal guardianship provisions for minor children are an extremely important part of estate planning for young families. There are certain provisions for guardianship Nevada parents need to be aware of when making their estate plan.
A Last Will and Testament is basically used to make dispositions of property, which do not take place until your death. Another purpose of a Will is to appoint someone to manage your estate and to appoint someone as guardian of your minor children. Without a Will, your property will be distributed to your family, following the laws of intestate succession in your state. Note that intestacy laws have basically remained unchanged for a very long time, and those laws may not take into consideration today's issues with the modern family (most importantly blended families). Your closest family members usually receive equal shares depending on the law's pre-determined priority system.
When one spouse or parent dies, the surviving spouse or parent will automatically be the child's legal guardian unless that person's parental rights have already been terminated. Should both parents die at the same time, or nearly the same time, any guardians named in a Will would become responsible for the child's care. A Will must be submitted to probate court, and the probate judge will oversee the entire process, including the approval (or disapproval) of the guardians named in the Will.
When you are considering who should be named as legal guardian for your children, take into consideration the age, health, location, and general personalities/parenting styles of the potential individuals. You must also recognize that these factors will probably change in the future. For this reason, it is a good idea to select both primary and secondary guardians, should there be anything preventing your primary guardians from serving in that role.
Permanent guardianship in a Will is approved by a court, which may take weeks or even months. Nevada allows parents to appoint short-term guardians to care for minor children for a maximum of six months. This ensures that the children do not have to spend any time in custody (child protective services, foster care, or other) while the permanent guardianship is being approved. In order to protect the children, there must be a separate legal document appointing short-term guardians.
One of the common reasons parents put off planning for guardianship of their children is that they are "looking for the right person." Of course, you want someone who will raise your children with the same values you hold, but finding the perfect fit may not be possible. In fact, it is not very likely. Instead, you need to find someone who has a similar belief system and who is also willing to instill in your children the values you hold. It takes some discussion and some compromise. But you cannot put off guardianship planning simply because you haven't found the perfect guardian yet. If you wait too late, a judge will make that decision for you. You can always re-execute a new Will, or change the Will, if you decide to change the appointment of guardians.
In order to properly care for your children, your guardians will need to have access to financial assets, as well. This can be established a number of ways, but is most effective through a Trust. A Trust may be created during your life (a Living Trust) or upon your death (a Testamentary Trust). Within the Trust, there are a few key things to consider. Who do you want to manage the money (i.e. is the guardian in charge of raising the children also responsible for the money, or do you separate those responsibilities)? Do you want the children to have equal shares regardless of circumstances, or would you like a Common Pot to be available for all of your children until they reach a certain age? Do you create a Living Trust and keep the Trust administration private, or do you create a Testamentary Trust and require judicial oversight of the Trust? Many of these questions are hard to answer on your own, and it is best to discuss these matters with an attorney in doing your estate planning.
Unfortunately, you cannot rely on something as informal as a letter or email to establish your choice for guardian of your minor children. No matter how clear your choice may be spelled out in a letter or email, it is not legally binding on the court. A judge could take that informal statement into consideration, but there could be so many issues of credibility for the judge to wade through, especially if someone challenges the appointment. Basically, if you take the time to choose someone and write it down, why not take the next step of making it official?
If you do not include guardianship provisions in your Will, the appointment of a legal guardian will be made by the probate court without any input or guidance from the parents. Although it is the judge's responsibility to ensure the best interests of the child are met, the decision may not coincide with your own wishes. That is why creating an estate plan is the best solution for you and your family.
Attend a FREE Webinar! If you have questions regarding guardianship, or any other estate planning needs, please contact Anderson, Dorn & Rader, Ltd., either online or by calling us at (775) 823-9455.
Families with minor children must do at least some basic estate planning, as soon as possible, in order to be prepared for the unexpected. Having a good plan in place will answer some very important questions, not only for your family but for the court, in the event you are not around to take care of your kids. We present three of the biggest questions families with minor children should consider in their estate planning.
By far the most important question to be answered is who will raise your children if something happens to you. That is a decision that has the potential to significantly shape your children’s lives. The guardians chosen will be responsible for your children's education, lifestyle, and general well being.
In choosing a guardian, most parents will want to consider a number of factors, including parenting philosophies, religious beliefs, location, discipline styles, personal values, personality types, and temperament. Money can be a factor, but should not be the sole factor in choosing a guardian; it is the parents' responsibility to provide for their children financially, even after their death.
Once the decision is made, those details need to be incorporated into your estate plan. This serves more than one purpose. Of course, planning ahead for the unexpected will put your mind at ease. But it will also keep your family from fighting about who should have your kids. The natural affinity that parents feel for their own children will likely cause great disputes between the grandparents and/or in-laws about who would do a better job raising your children. The proper estate plan can head off a bitter custody fight.
Your estate plan should include multiple guardianship roles. First, your plan should appoint a short-term, or emergency, guardian. This is generally someone close in proximity who can pick up the children in the event of emergency. A short-term guardian may be appointed for a maximum of six months. If a guardian is needed for longer than six months, your plan should also appoint a permanent guardian. The permanent guardian is the person responsible for raising your children. The permanent guardian and short-term guardian need not be the same person, and different factors should be considered when naming each. Your estate plan may also appoint a separate health-care guardian who will have the power to make medical decisions for the children.
Without a general estate plan, your minor children would still receive the asset from your estate through the laws of intestate succession in your state. The problem is, these assets will not be managed by someone that you choose. Instead, they will be overseen by the court. To receive any assets or funds, someone will need to petition the court on behalf of your child.
Instead, you can create a trust which will name the trustee of your choice to oversee your children’s money until they are mature enough to handle it themselves. The trust will only go into effect if certain conditions are met, such as the death of both parents. The trustee of the funds may be the same person as the guardian of your children, but many people find it beneficial (and risk-averse) to separate the role of guardian and trustee to avoid any concerns that the guardian will spend your children's inheritance.
As stated above, without a named trustee to manage your children’s finances, the court will manage the estate. One problem, for most parents, is that the court automatically loses the authority to manage your children’s money once they have reached the age of majority in your state. In some states, including Nevada, a child will take over the inheritance once they reach the age of 18; and you should ask yourself, "Is my 18 year old ready to walk into a large lump sum of money?" Many parents may not agree that their children are wise or mature enough to properly manage those funds. When you create a plan yourself, you can indicate when the funds should be released to your children - whether you decide they will be financially mature at 25 years of age, 30 years of age, or older.
While planning to deal with guardianship and finances for your children is important, it's just as important to make sure you have all your other ducks in a row with your estate planning. A well drafted estate plan should plan for issues that are important to you: avoiding taxes, allowing for flexibility, appointing fiduciaries, addressing health care issues, etc. The first step in the estate plan of families with minor children is to think about the children, but it's also important to plan for issues that arise as to the parents as well.
These are just a few issues families with minor children may face in the estate planning process. Discuss these issues with your estate planning attorney. If you have questions regarding planning for families with minor children, or any other estate planning needs, please contact Anderson, Dorn & Rader, Ltd., either online or by calling us at (775) 823-9455.
You may think it is relatively easy to name the people you want to be beneficiaries of your estate upon your death. Naming your children as beneficiaries is a no-brainer, right? But the method you use to transfer your assets to your children may differ depending on certain considerations: such as whether your children are minors or adults, or whether or not any of your children have special needs. There may be concerns that the guardian appointed to care for your minor children may not have the expertise to manage a large inheritance on behalf of your children. Further, special needs beneficiaries will need additional support throughout their lives, even as adults. Here is a short summary of some of the common issues related to naming your children as beneficiaries of your estate.
Of course, the first consideration is appointing a guardian for your minor children. The decision as to whom you should appoint as guardian for your minor children is a difficult one and should not be taken lightly. If you are having difficulty choosing a guardian, we recommend you read some of our other blog posts and essays on guardianship of minor children. If your guardian does not live locally, then parents should also consider a local short-term guardian to make sure the children don't spend a single moment in custody of the State or foster care.
Providing for your children financially
Once a permanent and short-term guardian have been appointed in the proper legal documents, the very next step should be making sure your children will be provided for financially. In addition to leaving your assets to them, you should also consider life insurance which can replace the parental income that would have been available to support them until adulthood. Retirement plans may be left to your children directly, but doing so may cause some unintended problems (discussed further, below). The manner in which you leave your assets to your children will depend upon your goals and concerns. Trusts are a very beneficial way to pass on assets to minor children because they allow more control of those assets, even after your death, for children (and guardians) who are not mature enough to handle their own finances.
Planning for your child’s education
Establishing a 529 plan for your child’s education is a great way to be prepared. A 529 plan is a specific type of education savings plan, operated by a state or educational institution, for the purpose of helping families set aside funds for college. It is called a 529 plan because of Section 529 of the Internal Revenue Code, which created this specific savings plan in 1996. A 529 plan allows you to maintain general control over the account until the money is withdrawn to pay your child’s education expenses. The only thing you need to do, for estate planning purposes, is designate who will take over management of this account after your death.
How can a child inherit from your retirement plan?
A spouse can automatically receive the benefit of your retirement plan after your death, whether a 401(k), 403(b), IRA, TSP, or other qualified plan. The retirement plan benefits received by your spouse maintain the same protections from creditors and bankruptcy. However, your children do not have the option of rolling over the assets in your retirement plan into their own IRA. Non-spouse beneficiaries generally must begin receiving the minimum required distributions soon after your death from an Inherited IRA. These distributions are based on their age and are taxable income to your beneficiaries as those funds are distributed. The entire balance of those funds are available to be distributed (and taxed) immediately, which eliminates any financial benefit from stretching out distributions and could mean that your children waste all of their inheritance by spending it. In 2014 the Supreme Court of the United States decided Clark v. Rameker, which held that inherited IRAs for non-spouse beneficiaries are not protected from creditors the way that they are protected for spouses. Careful considerations need to be made when deciding how to leave retirement plan benefits to your children, and a Retirement Plan Trust is a very beneficial way to protect those assets.
Children from a previous marriage
For some blended families, a decision has to be made as to who needs financial security more. If you have children from a previous marriage, it is wise to weigh your desire to provide income and financial security for your current spouse, with your desire to provide an inheritance to your children. There are many options to accomplish these goals; one way to accomplish both is to create a QTIP trust or bypass trust. This tool gives you the option of providing for a surviving spouse, while the remainder goes to your children, including those from a previous marriage.
If you have questions regarding guardianship, beneficiaries, or any other estate planning needs, please contact Anderson, Dorn & Rader, Ltd., either online or by calling us at (775) 823-9455.
Creating an estate plan to protect your minor children is one of the most important things you will ever do. When you and your spouse have separated or divorced, creating or revising your estate plan is not generally top of mind. However, if you have minor children it is in their best interests for you to discuss your estate planning with your ex-spouse.
Necessary Revisions to an Estate Plan Following Divorce
There are three important estate planning issues that need to be considered after a divorce: guardianship, financial inheritance and the possibility of remarriage. All of these issues will likely require revisions to an existing estate plan. If you have not created an estate plan yet, then you need to establish one with these three issues in mind.
Guardianship Issues Following Divorce
If one parent passes away, guardianship automatically passes to the surviving biological parent, regardless of the status of custody, unless the surviving parent is determined to be unfit. However, the possibility that your minor child may need a non-parental guardian must also be considered. For this reason, it is important to discuss the nomination of a guardian with your ex-spouse. If you can come to an agreement on this issue and include it in your estate plan, everyone will feel more secure about your child's future.
Your Minor Child's Financial Inheritance
A major concern for many divorced couples is who will have control over their estate when the child inherits from a deceased parent. Obviously, a minor child is unequipped and lacks legal capacity to handle their own finances. It is the child's guardian who is typically in charge of an inheritance. When that guardian will be the ex-spouse, most couples have a problem with that idea. The solution is to place your child’s inheritance in trust until he or she reaches an appropriate age when you feel he or she should be ready to properly manage the inheritance. Until the child reaches that age a third-party would be selected as trustee who will have the responsibility of maintaining the trust and distributing the income and assets either to the guardian for the benefit of your child, or directly to vendors and service providers for the benefit of the minor child. Because your trustee and guardian will often be required to work together, and to try to avoid a designation of a guardian that conflicts with that of your ex-spouse, it would be best for you and your ex-spouse to agree on someone with whom you both are comfortable.
Planning for the Possibility of Remarriage
When couples get married, in most cases their finances become commingled at least to some degree. The same is true for a subsequent marriage following divorce. If you fail to include provisions in your estate plan for your minor children, all or most of your assets may automatically pass to your new spouse upon your death, leaving your child with insufficient recourses to provide for his or her health, education, maintenance and support. This can be prevented by simply including the proper provisions in your estate plan.
If you have questions regarding divorce, or any other estate planning needs involving minor children, please contact Anderson, Dorn & Rader, Ltd., either online or by calling us at (775) 823-9455.
If you have any children under the age of 18, it is important that you at least have a will, including provisions designating who you would want to be the guardian(s) of your children, should anything happen to you. Legal guardianship provisions for minor children are an important part of estate planning.
The basics of the last will and testament
A last will and testament is basically used to make dispositions of your property at the time of your death. Another purpose of a will is to appoint someone to manage your estate and to appoint someone as guardian of your minor children. Without a will, your property will be distributed to your family following the laws of intestate succession in your state. Your closest relatives usually receive equal shares depending on the law's pre-determined priority system.
Establishing legal guardianship of minors with your will
When one spouse or parent dies, the surviving spouse or parent will automatically be the child's legal guardian unless that person's parental rights have already been terminated. Should both parents die at the same time, or nearly the same time, a guardian named in a will would become responsible for the child's care absent a court's determination that it is not in the child's best interest to have legal guardianship awarded to the person you designated. The presumption under the law is that the person you designate as your desired guardian of your minor children is the most appropriate choice.
Be sure to consider both present and future circumstances
When you are considering who should be named as legal guardian for your children, take into consideration the age, health and location of the potential individuals. You must also recognize that these factors will probably change in the future. For this reason, it is a good idea to select both primary and secondary guardians, should there be anything preventing your primary guardians from serving in that role. These designations should be reviewed at least every 2 years.
Make sure the legal guardians will have everything they need
In order to properly care for your children after you are gone your guardians will need to have access to financial assets, as well. Generally, it is most advantageous to accomplish this through the creation of a revocable living trust that is funded while you are alive. Using this technique your assets avoid the probate process upon your death and the person you designate as the successor trustee under the trust has access to the financial assets and the authority to make distributions to or for the benefit of your minor children without the probate court's involvement. The successor trustee may be the person you designate as your guardian, or it could be someone else if you feel someone other than the guardian is best suited to manage the financial decision-making. This can also be established through a testamentary trust created under a will, but then the assets would need to go through probate and the court will retain ongoing jurisdiction over the trust. The costs associated with administering a testamentary trust are generally much higher than those involved with the administration of a living trust after your death.
What happens if you do not nominate a guardian?
If you do not include guardianship provisions in your will, or establish a trust, the appointment of a legal guardian will be made by the probate court. Although it is the judge's responsibility to ensure the best interests of the child are met, the decision may not coincide with your own wishes. That is why being proactive and creating an estate plan is the best solution for you and your family.
If you have questions regarding legal guardianship, or any other estate planning needs, please contact Anderson, Dorn & Rader, Ltd., either online or by calling us at (775) 823-9455.
Clients with minor children find that one of the hardest decisions in the estate planning process is how to choose a person or family to care for those children in the unfortunate event of the parents' incapacity or death. Here are some steps that might help in this decision making process.
The easiest place to start is to make a list of anyone and everyone who could be a good guardian for your minor children. Ask yourself, "Would this person/family provide a better home for our children than the State?" This is a good point of reference, since the alternative to naming your own guardian is to have the children placed under State supervision (such as foster care) until a guardian can be named (which may not be someone that you'd prefer). This list could contain dozen of names, but ideally should have at least 4 or 5 people, couples, or families that you trust with the care of your children. Make sure to think beyond immediate family, such as brothers and sisters. Many clients choose cousins, aunts and uncles, grandparents, and friends as guardians. Try not to let money matters affect your list, unless the potential guardian lacks basic money management skills, since things such as life insurance can ensure your children's material well being.
Make a second list of those things that are important to you. Do you want your child to be raised with a certain religious belief? Is it important that your guardian be of a certain age, or that they have a certain threshold for patience and maturity? What is important to you in looking to your guardian's child-rearing philosophy? Is marital or family status of a guardian important? Your guardian will be a role model for your children, so it's important that you understand what that person to be. You may be able to exert some influence on your guardian's behavior in raising your children (they might be willing to go to church with your child, if they don't already, they might change some social and moral habits to accommodate your parenting wishes, etc.). However, there are some characteristics that will not change; a person's integrity and financial management skills are unlikely to change by becoming a guardian.
Congratulations! Once you have completed these first two steps, you have a list of potential people that you support raising your children, and you have a list of factors that are important to you in how you want your children to be raised and what you look for in a guardian. Looking at these two lists, you should be able to narrow down the list of candidates to make the decision much easier. While this is an easy step for many families, this may be difficult if there is a disagreement between the parents. Mom may want her sister to be the guardian, while Dad may want his cousin's family to care for the children. Consensus is important! Use this as an opportunity to have a much deeper conversation about the people and values, and try to understand each other's position in order to find a solution that you both feel good about. Remember - it is important to have more than one potential guardian on your list, as successor guardians should be named in your estate planning documents.
While it's not a legal obligation to clear this decision with the guardian of your choice, it's a good idea to have a conversation with them about it. This can be an opportunity to really develop deeper relationships. Many times, we see that those family members or friends asked to be guardians will want to take a more active role in the life of the child, as a god-parent would in some religions. Ask the guardian if they are willing to support the care of your children, and start discussing what that family structure would look like. This is a good place to discuss the list of values that are important to you (the list that you wrote in Step 2, above). Focus on what you want for the growth and development or your children as you communicate this with your guardian.
The worst mistake you can make is to go through this process and to avoid the final step of drafting the proper language in your estate plan. Make sure to meet with your attorney to ensure that the guardian is nominated in your trust or will. Try to avoid off-the-shelf guardianship forms, as they likely don't address state-specific benefits. For example, in Nevada a person can appoint a temporary guardian to take care of the kids while the permanent guardianship is settled - which means that your minor children may avoid being placed in the custody of the state for even a minute.
There are other times when certain legal forms should be considered for minor children. For example, if your minor child is travelling within the U.S. under the care of someone else, or if your minor child is travelling outside the U.S. with only one parent, you can have your attorney draft the proper Certification of Consent for Minor's Travel forms to make this process easier.
At Anderson, Dorn, & Rader, Ltd., we regularly help clients handle these issues where there are minor children involved. If you reside in Nevada or California, please feel free to reach out to us to discuss these issues by calling our office at (775) 823-9455.
Many parents include revocable living trusts in their overall estate plan. Included in their trust is a sub-trust for minor children that can protect the inheritance. It is the best way to ensure that your child will inherit your assets, while protecting those assets until your child receives distribution. Such a trust will also identify a trustee who will be responsible for managing, investing and distributing those assets, in compliance with your specific instructions.
What happens if you do not have a trust?
If you do not have an appropriate plan in place, the court will determine what happens to your minor child upon your death. That also includes naming a financial guardian to manage any assets your child will receive as an inheritance. Another issue to consider is that, under the law, all of those assets will be turned over to your children on his or her 18th birthday, with no more supervision. Most parents, if given a choice, would not trust their young adult with a substantial amount of money or assets.
The benefits of establishing a trust for your minor child
By establishing a trust for your minor child, you are given the opportunity to provide more detailed instructions regarding the management and use of the trust assets. First, you have the ability to choose who will manage the assets on behalf of your child, instead of leaving this decision to the court. Second, you get to determine how and when you want your child to receive the assets. So, for instance, you may decide that you don’t want your child to have full access to the trust funds until age 30, or upon graduation from college. Until your specified conditions have been met, the trustee you named will continue to manage the assets, which can be used for your child’s benefit, such as paying for care and educational expenses. A living trust plan will allow your family to avoid the time consuming and expensive probate process, while still ensuring that the funds are readily available for your children’s care, as needed.
A trust can prevent accidental disinheritance
Blended families are very common these days. Having a trust-based estate plan can protect your child and his or her assets, if your surviving spouse ever remarries. Accidental disinheritance would be tragic for your child, and it can be avoided. Consider the following situation. Tom and Sharon create an estate plan together that leaves everything to each other and then to their children. Tom dies, leaving everything to Sharon. A couple of years later, Sharon meets Frank and remarries.
Without thinking about the consequences, Sharon and Frank execute a new estate plan that leaves everything to each other and then to their respective children from their prior marriages. What happens if Sharon dies before Frank? Everything passes to Frank, who has no obligation to leave anything to Tom and Sharon's children. In other words, Sharon accidentally disinherited her own children. With the proper trust provisions, Tom and Sharon can avoid this situation and ensure that their children are not disinherited.
If you have questions regarding trusts for minor children, or any other estate planning needs, please contact Anderson, Dorn & Rader, Ltd., either online or by calling us at (775) 823-9455.
Estate plans are very important for many different reasons. Typically, an estate plan includes a will or trust, a power of attorney and advance medical directives. But, for a young family with small children, there are other distinct issues that should be addressed in an estate plan. The primary concern becomes, what will happen to the children if the parents were to die simultaneously. Couples with minor children need to take special care to plan for this unfortunate event.
Have you considered who will care for your children if you and your spouse died simultaneously? Whether in a car accident, plane crash, or some other unforeseen tragedy, your minor children may be left with no one, and the state may have to step in. Without your guidance, there is no guarantee that they will end up with the best person to care for them.
If you want to have a say in who that person will be, naming a guardian in your Will is the best way to establish your wishes. Nevada has special laws that allow you to appoint a temporary guardian while the Court approves the guardianship to ensure that your children do not spend a single minute in the custody of the State.
Without an estate plan, your child will inherit his or her share of both parents’ estate, to be held in an estate of the minor account under Nevada's Uniform Act on Transfers to Minors. The guardian will be able to request distributions of the money in order to provide care for the child. Then, once the child has reached the age of majority in the state where he or she lives, the remaining assets of the estate will be distributed directly to the child. This would be true, regardless of whether or not the child is capable of managing the money.
Trusts for minor children
Parents can create a trust for their minor children, as part of their overall estate plan, which will hold any assets that are transferred to the children while they are still minors. There can be a provision in the parents’ will that creates the trust for the minor children, and also names the trustee to invest, distribute and manage the assets. This will be done for the benefit of the minor children, in accordance with the terms of the trust.
Typical distributions from a minor trust
The most common types of distributions from trusts for minors are for healthcare, education, general maintenance and support. Leaving assets in trust provides great tax benefits, asset protection, and divorce protection for your children throughout their lifetime. In Nevada, these benefits can be passed down to your grandchildren, great-grandchildren, great-great-grandchildren... for up to 365 years. Alternatively, the trust can be designed to terminate when the child reaches a specific age, not necessarily the age of majority. Another way to distribute the funds is by increments at specific ages. For example, the child can receive 1/3 of the trust at age 21, another 1/3 at age 30 and the final portion at age 35.
Overall, a primary goal of estate planning for families with small children, is to ensure that the child will be placed with an appropriate guardian and cared for financially until adulthood.
If you have questions regarding trusts for minors, or any other estate planning needs, please contact Anderson, Dorn & Rader, Ltd., either online or by calling us at (775) 823-9455.
Estate planning, with your minor children in mind, requires more than simply choosing someone to raise them. Another equally important consideration is who will manage the money and property that your children will inherit. Certainly, they cannot do it themselves. While you can leave instructions in your will or living trust, there are many issues that need to be addressed. For example, you need to know exactly how to leave real estate behind for your minor child.
Why early planning is a must
It is true that most parents leave everything to each other, expecting the surviving parent to care for the children. In those situations, the children are named as alternate beneficiaries. On the other hand, single parents often leave all of their property directly to their children. In either case, it is necessary to plan for the possibility that your children will receive their inheritances when they are still too young to manage it themselves. Someone competent and trustworthy needs to manage the property for them. More importantly, real property comes with its own set of issues that need to be considered.
Property management choices
If you do not want to rely on a court-appointed guardianship for your children, but you want to avoid the possibility that your child might not be mature enough to manage an inheritance wisely, there are a number of strategies. In order to protect your children and their inheritance it is important to choose someone in advance to manage the property your minor children will someday inherit. There are several ways to accomplish this, including naming a custodian under the Uniform Transfers to Minors Act.
The Uniform Transfers to Minors Act
The Uniform Transfers to Minors Act, adopted by most states (including Nevada), allows you to select a “custodian” to manage the property you leave to your child. If that child is under the age of majority at the time of your death, the custodian automatically steps in to manage the property. This can easily be accomplished by titling the property in the name of the minor, naming the adult as custodian under the Nevada UTMA. Typically, the custodianship ends automatically once the beneficiary reaches a set age, between 18 and 25. It is best to state the age in the deed, itself. If you want your child’s inheritance to be managed longer than that, have greater control and discretion, a trust would be a much better option.
What if I don’t provide for property management?
If you have not arranged for management of your child’s inheritance, then the probate court will do so, by appointing someone as the child’s “property guardian.” The court-appointed guardianship can be expensive and complicated, with frequent reporting requirements and limited management authority.
Legal issues inherent in real estate
Inheriting a house can result in its own set of unique issues. Couple that with the complications of minor inheritance, and the advice of an estate planning attorney becomes very valuable. Will the child live in the house, or should it be rented or sold? Another consideration is whether the home needs remodeling or upgrading. An inspection may be necessary to determine what needs to be done to the house, before it’s sold or rented. These, and other concerns can be discussed with your estate planning attorney.
If you have questions regarding inheritances to minor children, or any other estate planning needs, please contact Anderson, Dorn & Rader, Ltd. by calling us at (775) 823-9455.
Whether your children are visiting their grandparents out of town, or they are away at camp for two weeks, there may come a time when you will be unavailable to consent to medical treatment for your children. As stressful a thought as that might be, there are ways to handle this situation. It only takes a little bit of planning. Creating a medical power of attorney for minor children is the easiest and most effective way to give you peace of mind, when you are away from your kids.
The purpose of a medical power of attorney for a child
Because it is not a true power of attorney, it is also referred to by some as a child medical consent, a medical power of attorney can be used whenever parents are unable or unavailable to provide consent for their child’s medical treatment when it is needed. This important legal document will provide your child’s caregiver during that period of time, the authority to make medical decisions for the child, which would normally require a parent’s consent.
Why would a medical power of attorney be necessary?
Some people do not realize that health care personnel are not allowed to perform certain types of treatment on a minor without the parents’ permission. Typically, this includes non-emergency, life-saving procedures. In other words, an ER doctor would be allowed to do whatever is medically necessary to save your child’s life, but short of that, permission is most likely required. A medical power of attorney would allow the temporary guardian listed on the document to give consent, just as the parents would. The power of attorney would only become effective if necessary.
When should I create a medical power of attorney for my child?
A medical power of attorney can be very useful in a variety of situations. If you are travelling and leaving your child in the care of a friend or relative, a medical power of attorney is a good idea. When children go to overnight camps or boarding schools, parents are often required to sign a similar consent form. Many people also use medical powers of attorney for grandparents, babysitters and nannies. The choice is yours.
What types of power can be given?
In most cases, a medical power of attorney for a child provides rather limited powers. What it does not do, is transfer any parental rights, other than the right to make health care decisions. The terms of the power of attorney can be drafted so that it only covers certain types of medical situations, such as emergencies. It can also provide specific dates that the power or authority is valid. A medical power of attorney is not effective if the parent becomes disabled or dies.
Limitations on the duration of medical power of attorney for a child
Each state typically sets the maximum amount of time a medical power of attorney for a child can remain valid. For parents who are in the military, however, exceptions are often made to allow for a longer duration. Usually, this type of power of attorney is considered “nondurable,” meaning that it ends if the parent becomes incapacitated or incompetent.
If you have questions regarding medical powers of attorney for children, or any other estate planning issue for families with minor children, please contact Anderson, Dorn & Rader, Ltd., either online or by calling us at (775) 823-9455.
There is a unique area of guardianship law referred to as “standby” or “pre-need” guardianship, which allows for the special transfer of child custody in specific situations. Each state has its own position on this law, and not all states allow it. This article will discuss the Nevada standby guardianship laws and how they can be used as part of your estate plan, to ensure the protection and care of your minor children, if something should happen to you.
A standby guardianship, or pre-need guardianship, is a mechanism for parents to prepare for the future care of their children, upon their death or incapacity. Typically, the parent making the declaration or nomination is chronically ill, or has been diagnosed with a terminal illness. Approximately 26 states have passed legislation recognizing this very specific type of guardianship. This type of guardianship is only triggered by the parent’s death, mental incapacity, or physical debilitation. As such, the named guardian is on “standby” until that triggering event occurs.
In Nevada, a parent is allowed to nominate or appoint a short-term guardian in writing for the child without approval of a court, as long as it is for an unmarried minor child, of which the parent has legal custody. If the child is age 14 or older, he or she must be notified and provide written consent.
The appointment of a short-term guardian must be in writing, and it becomes effective immediately upon execution. The document must identify the appointed guardian and include the date on which the guardian is appointed, the name of the parent appointing the guardian, and the minor child for whom the guardian is appointed. The document must be signed by the parent and the guardian, in the presence of a notary public.
A short-term guardian serves for 6 months, unless the written instrument appointing the guardian specifies a shorter term or specifies that the guardianship is to terminate upon the occurrence of an event that takes place sooner than 6 months. The appointment of a short-term guardian does not affect the rights of the other parent of the minor.
A standby or short-term guardian cannot be appointed for a minor child if there is another parent whose parental rights have not been terminated or whose whereabouts are known. If the other parent is willing and able to care for the minor, the rights of that parent must be considered before appointing a short-term guardian.
If you have questions regarding guardianships, or any other estate planning needs involving minor children, please contact Anderson, Dorn & Rader, Ltd., either online or by calling us at (775) 823-9455.
A report was made available by the U.S. Census Bureau in 2010 stating that around 26% of minors under the age of 21 were living in single-parent households - an alarming statistic.
Everyone hopes to live a long and healthy life, and in fact the average lifespan at this time is 78 years. Of course, this is an average, not a guarantee. Everyday we read reports about young people dieing and leaving minor children behind.
We all recognize the fact that accidents take place every day that kill young people. Other young adults pass away as a result of catastrophic illnesses. It is just not going to happen to us, right?
When people who die at a young age leave behind minor children, it is seldom that they have taken the time or opportunity to properly provide for their welfare.
The children of single parents are vulnerable. All single parents absolutely must have an estate plan in place that names a guardian to care for the children.
We should also have sufficient life insurance to provide a financial underpinning for the children throughout their lives. To make sure that the funds are properly managed should this become necessary you could include a testamentary trust in your last will. You may want to consider a revocable living trust instead, so a court does not need to supervise the guardian with annual hearings.
To learn more about why estate planning is so important for the parents of dependent children please take a moment to download our free report and read it at your earliest convenience: Estate Planning for Parents of Young Children
A lot of people procrastinate when it comes to estate planning, and in fact the majority of Americans have not executed all the appropriate estate planning documents.
This pattern of procrastination is not confined to single individuals who have no children. Many parents who have minor children do not have an estate plan in place either, and this is absolutely unwise.
To lend a hand and provide information we have created the K.I.S.S. the Kids program.This acronym stands for "Keep the Inheritance Safe and Secure for the Kids."
We want people to understand just how important it is to make sure that their minor children are provided for financially, while avoiding foster care or protective custody. Also, parents need to understand that children cannot consent to medical procedures. If you happen to be away when a child needs medical attention, who is legally authorized to give consent?
As young people, we tend to procrastinate with regard to estate planning is because we feel we will have plenty of time to execute an estate plan "later on." Unfortunately, later on arrives too soon for many families and their planning is not in place.
The stark reality is that people of all ages pass away every day, and when you go through life without an estate plan you are taking a major risk. Sadly, you will not be the person who pays the price if the unthinkable was to take place. It is the children that you will be leaving behind that would suffer the consequences.
We invite you to visit our webpage that is dedicated to the K.I.S.S. the Kids program. To get there simply click this link: Anderson, Dorn & Rader Present “K.I.S.S. the Kids”
There are a lot of details to take into consideration when you are planning your legacy, and the best way to address them is with the assistance of an experienced estate planning attorney. Rather than being consistently confronted with a series of unanswered questions as you think things through it is much simpler and more efficient to sit down with a legacy planning professional and work through the process from an informed perspective.
Experienced estate planning attorneys know how to proceed under any circumstances and they also understand how to adjust your estate plan on an ongoing basis as changes both within your life and throughout society as a whole take place that impact your existing plan.
One of the intricacies that people often face when they are engaged in inheritance planning involves providing for minor children. There are a number of different ways to proceed, and one of them would be to create a trust and make the child the beneficiary.
You can stipulate whatever you would like to in the trust with regard to what expenditures the trust is empowered to make in behalf of the child while he or she is still a minor. The grantor could then go on to set forth the terms for distribution of assets after the child becomes a legal adult.
Some people allow for the transfer of the total lump sum when the child reaches a particular age, and others arrange for more gradual distributions. You could even choose to include incentives such as allowing for regular distributions while the beneficiary remains in college with a lump sum to follow upon graduation.
Short of creating a trust you could name a property guardian in your will or appoint a custodian under the Uniform Transfers to Minors Act. At a minimum, parents of minor children must have a will where a guardian of the person of your children can be named.
Providing for minor children is an important part of many estate plans. If you would like to learn more details, simply arrange for a consultation with an experienced estate planning attorney.
No one wants to consider dying before their children reach adulthood, but it is a very real possibility. Making a guardian plan for your children after your death is the best way to make sure they are safe and happy. To start a guardian plan, make a list of possible caregivers.
An older guardian, such as a grandparent, will have life experience and maturity, but may, with aging, become physically unable to attend to younger children. On the other hand, a child who has already reached adulthood may have a very close relationship with your younger children. You must take into account whether or not that older sibling will have enough life experience to provide proper guidance.
Consider what type of lifestyle is important to you. Do you mind if your caregiver is unmarried? Also consider if your choice has other children and if the added responsibility of your own children may be too much.
It would be best if your chosen guardian could step in to raise your children the same way you would, but that may not always be possible. Each person on your guardian list will have a different parenting style and may teach your children different morals and values. If you prefer that your chosen guardian observe a specific religion, you may want to make this a major consideration in your decision.
What if your chosen person has plans to travel around the world? Or what if that person is doubtful of his or her parenting abilities and is therefore unwilling to take the job? When you narrow your list to five choices, you may want to ask each person if they are willing to take the position.
Your child will do best if the guardian is someone with whom he or she already has a close relationship. If you feel your top guardian choice has had limited access to your child, it would be best to start including that person in your child’s life on a regular basis. This could give you a better idea if that person is the right fit.
As you evaluate all of your caregiver options, narrow your list down to two or three choices and rank them. You can use your second and third selections as backup guardians, in case your first choice becomes unavailable.
For more information on the topic, visit our page on our workshop Keep the Inheritance Safe and Secure for the Kids. If you would like to speak with the experts at Anderson, Dorn & Rader for assistance, schedule an appointment!
A pot trust (also referred to as family trust) is a single trust for all of the children in the family that is used in the event that both parents die before the children reach a designated age of maturity. It offers some unique pros and cons for your beneficiaries.
An advantage to having a pot trust is that the trustee may be given the flexibility to spend the funds in any way he or she deems fit. That means that little Jimmy could have tuition paid to attend a trade school while Mary's tuition at an accredited university is paid if that’s what the trustee determines is in their best interests. However, if you gave a trustee broad discretion to make these types of decisions, you should be assured that your trustee is someone in whom you can place your confidence to make the decisions as you would desire.
Another consideration is that the trust is set up to operate until the youngest of the children reaches the designated age. Any funds then remaining in the trust would be disbursed equally to all the children. But if there’s a large gap in ages between your children, the older children may be waiting a significant time to receive their portion of the inheritance.
Of course a pot trust is only one toll of many to provide an inheritance for your children after you’re gone. To learn more about inheritance estate planning, get in touch with Anderson, Dorn & Rader.