PLANNING FOR DEATH WHEN YOUNG CHILDREN ARE INVOVLED?No one likes to think about death much less plan for it. Many surveys indicate this is one of the biggest factors in not doing estate planning. However, doing estate planning is an act of love. This is especially true when there are young children involved.
For many, their most precious assets are their children. Many young couples mistakenly believe that they do not have a need for estate planning because they do not have a high net worth. This notion must be reconsidered when children under age eighteen are involved because these children are minors.
There are two primary concerns regarding minor children and estate planning. First, who is going to take care of the children? In Utah, the person who cares for the personal needs of the children is called the guardian. Second, who will take care of the financial needs of the children? This may or may not be the same person (or institution) as the guardian of the children. In Utah, the person responsible for the children's financial matters may be a court appointed conservator or if estate planning was done prior to death, it could be a trustee of a trust established for the children's benefit.
Usually the designation of guardian is set forth in the parents wills. In appointing a guardian for minor children, parents have many options. For example, parents can specify they only want a married couple to serve as guardian of their children. Additionally, parents can specify certain requirements that must be satisfied before an individual or couple is appointed guardian. In short, parents have various options if they do the planning before their death.
In addition to concerns related to the personal care of the minor children, there is also the question of asset management for the children. Significantly, children under age eighteen cannot legally own property in their individual capacity. Therefore, in order to have life insurance proceeds or any other assets of an estate distributed to a child under age 18, a conservator must be appointed by the court. The legal proceedings required to get a conservator appointed can be at best an additional expense and inconvenience. At its worst, a conservatorship proceeding can be a legal fight between family members about who is to manage the assets of the children. Although these scenarios may be unappealing, the worst part about failing to plan for minor children may be what happens when they ultimately receive their inheritance.
Under Utah law, a conservatorship ends when the child reaches age 18, unless special circumstances exist and the court allows the conservatorship to continue until age 21. The result is that at age 18 (or at most 21) the child has complete control over the assets. While parents may envision their life insurance or other assets of the estate being used for their children's education, church service, or other purposes, children at age 18 or 21 may have other plans.
Parents can specify that the proceeds will not be distributed outright to the children until the children reach a particular age or will be distributed in incremental stages at various ages. The parents have the flexibility of specifying that no distributions will be made unless the children are living their lives pursuant to those standards important to the parents. In short, through the use of a trust, the parents have the opportunity to provide as much instruction as they want with respect to the inheritance they leave for their children.
In conclusion, estate planning is very important when minor children are involved. If you stop and think about it, you may find it ironic that many of us provide more instruction to the babysitter about how to care for our children for a few hours than we provide for loved ones regarding our children's care in the event we are no longer there to care for them.
Jeffery J. McKenna
Attorney licensed and servicing
clients in Utah, Nevada and Arizona
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