It is essential that you plan for your minor child’s welfare in the event of your death. This is especially true if you are in the process of getting divorced, or are already divorced, as an estate planning lawyer, like from Bott & Associates, LTD., can explain.
There are two areas in which plans must be made for your minor child:
- Personal care
- Financial care
Personal Care. If you predecease your ex-spouse, in most cases children will automatically go to your ex. If your instructions are put into a will, they will be followed. So if you have full custody of your minor child, and choose your first cousin to care for her in the event of your death, even if your ex is not proven incompetent, she will still go to your cousin. But you must make this legally clear!
Financial Care. A will lets you control your child’s financial life after you’re gone. You’ll need to be familiar with the following terms:
- Custodianship: This allows the parent to designate who should control the child’s estate in the event of the parent’s death.
- Testamentary Trust: This lets parents postpone payment to the child past 18 and outlines powers to the trustee in managing assets.
- Minor’s Trust: This type of trust allows a parent to transfer money to the child up to the federal exemption limit each year without having to file a gift tax return.
You may find templates for these on the Internet, but that could be asking for trouble: these are complex, and in some cases, irrevocable decisions, and you’ll want a solution tailored to your specific needs. Even more important, a professional can decide what trusts are right for you and what might not be necessary in your situation.
Give a lawyer a call. They can take the guesswork out of a truly complicated situation because your child deserves the best of care, especially if you are no longer able to provide it.