Typically, the couples that we work with in the estate planning environment are in their 50s, 60s, 70s and 80s.  Often, when working with families to achieve their estate planning objectives, it becomes apparent that their adult children, who have young children of their own, have not engaged in proper and effective estate planning.  Why?

Most often, it’s because the young married couples haven’t thought about it, don’t have the time to focus on it because of careers and caring for the children, and often because they believe they cannot afford the cost of proper estate planning.  Sometimes, it just a matter of the lack of information or understanding what can be done, and what can happen. Unfortunately, most of them have not thought about the potential cost and complications of not doing proper estate planning.

Today is the 20^th birthday of a young man who survived his father’s death when he was 14 years of age.  The father designated his only son as the beneficiary of life insurance proceeds and his retirement plan.  We handled the guardianship of the property that was established to hold what was left to him. The young man was left almost a million dollars at age 14.  It almost destroyed him.  Luckily, through the persistence, love and dedication of his mother, he was able to overcome the difficulties caused him by sudden wealth at age 14, but it was an extremely costly experience.  And, instead of being financially secure today, he merely has a nice, but small, nest egg with which to move forward with his life.

His story is the classic example of why proper estate planning is appropriate for anyone who has minor children.

Considerations for Proper Estate Planning

Who Will Care for the Children?

Proper advance directives allow the parent of a young child to designate who will be responsible for caring for the child in the event of the parents’ incapacity.  A properly drafted last will and testament, under Florida law, allows the parents to designate who will be the legal guardian of a minor child after the death of the parent.

Without these documents, the probate court will determine who will be the guardian of the minor child at death.  Usually, that will be a family member.  Often it results in disagreements among surviving family members, leading to expensive, disruptive, and sometimes protracted litigation.  Those disagreements can be avoided with proper legal documents.

Avoiding a Guardianship of the Property of a Minor Child

If a parent dies while a child is a minor, the probate court will appoint someone to handle the management of the assets the parent leaves for the child until the child reaches 18 years of age.  Any expenses for the child, beyond basic needs, will require the probate court’s approval.  Though such requests are often granted by the probate court, there are legal expenses that will be incurred obtaining the court’s approval.  Your desires and goals for your children, will not be known by the probate judge, and your children’s lifestyle will be subject to the judge’s notions of what is appropriate.

Perhaps worst of all, when your child turns 18, whatever property that remains in the guardianship will be turned over to your 18 year old in lump sum – to do with as his or her 18 year old mind desires.  Based on the many guardianships of the property of a minor child that we have handled over the years, that is not a desirable outcome in the vast majority of cases.

Protection from Creditors, Predators, and Mismanagement (Irresponsibility)

Another serious concern, effectively dealt with through proper estate planning documents, is the protection of the children from creditors, predators and themselves.

The divorce rate is rampant in America.  Lawsuits are even more prevalent.  And, the ability to properly manage assets doesn’t arise through the mere passage of time alone.  With proper estate planning documents, the life insurance proceeds and other property a young couple typically leaves for their children, can be protected against creditors, including divorcing spouses, predators – those people who would otherwise prey upon young adults with more money than experience – and from the typical mistakes that any person can make when lacking the maturity or experience in managing significant sums of money.

Protect Your Children

The young man who received almost a million dollars when he was fourteen was fortunate compared to many in similar situations.  A substantial part of his inheritance was lost to the cost of a guardianship, and he lost all motivation to be a productive member of society for a period of time.  Fortunately, his caring mother didn’t give up on him and helped him work through the psychological problems created by his father’s death and his own sudden wealth.  That’s not always the case. 

If you have young children, even young adults, proper estate planning can allow you to transfer your wealth to them in a way that will benefit them, protect them, and ensure they have the opportunity to enjoy what you have left them.