Guardianship Estate Planning For Your Kids

Every parent knows the amount of time spent worrying increases dramatically the minute you have children. It might be worrying about them getting hurt – physically or emotionally – making sure you can pay for college, or instilling certain traits. One of the best things you can do to protect your children (which is also often what parents overlook or procrastinate doing the most) is to ensure that your estate plan is in place.

An estate plan can protect your assets to make sure your children are provided for and can appoint guardianship so the people you want caring for your children are the ones that will be (and those you do not want to be involved, will not be). There is a laundry list of benefits that setting up an estate plan can do, but more importantly, the flip side is just how detrimental failing to do so can be.

Take Chris and Linda, who had 2 young children and a modest estate. When an unexpected accident led to their passing, the children were left with no designated guardians and no access to the assets. Chris and Linda owned a home (with a mortgage), a few bank accounts, a life insurance account, and some retirement accounts. A lawsuit was initiated in family court to determine who would be the guardian, and a sibling that all parties knew Chris and Linda absolutely did not want involved petitioned to be the guardian. From there, an expensive, brutal and time-consuming suit ensued.

To make matters worse, no one had access to Chris and Linda’s assets to help pay for the children. A probate was required in order to transfer the assets upon their death and to determine who had the right to control them (while all fees and costs had to be paid out of someone else’s pocket). Linda’s life insurance could not pay out because, after Chris, there was no beneficiary named. The retirement account for Chris could not pay out because the children were named as contingent beneficiaries after Linda, but the proceeds could not be paid to a minor. Add the fact that a separate attorney had to be appointed to act on behalf of the children, and the end result was that after over two years, and has burned through over $85,000 in fees and costs, the estate was finally sorted out so that the guardian of the children could receive some funds for their care. Unfortunately, the only home the children knew had to be sold to pay for the cost of the process, and the children had to be relocated to a new school, away from their friends and teachers, with almost nothing of their previous, familiar life left.

While this type of case is tragic, the aftermath doesn’t have to be so traumatic. Setting up an estate plan, and clearly documenting the items that are important to you – who should raise your kids, make health care decisions for you, control your assets – is a simple process and can offer huge protections if done correctly.

Duncan Law | Duncan Tax offers a complimentary one-hour consultation for all new clients to discuss your estate planning needs. Contact our estate planning department for an appointment.

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