Imagining a world where we aren’t around to raise our minor children is not everyone’s favorite pastime. It's one of the hardest possibilities to consider, which is also one of the reasons many parents put off estate planning.
But estate planning isn't about expecting something bad to happen. It's about making sure your children are protected if the unexpected does happen.
For parents, an estate plan can provide more than instructions for dividing assets. It can help answer some of the most important questions your family could ever face: Who will care for your children? Who will manage their inheritance? Who will make decisions if you become unable to make them yourself?
Without a plan, those decisions are left to the courts who often choose from biological family members and they are suddenly forced to figure things out during an already difficult time.
Your Children Need a Plan, Not Just an Inheritance
When parents think about estate planning, their first thought is often about money. They may consider who will inherit the house, savings, retirement accounts, or other assets.
But for families with children, the most important part of an estate plan may have nothing to do with money.
It's about who will physically and emotionally take care of your children.
If both parents were to pass away, a will can allow parents to nominate a guardian for their minor children. This gives you an opportunity to express who you believe would provide the best care, stability, and support for your children.
Without a documented plan, the decision is left up to a judge who is making their best guess as to what you’d want while considering the best interests of your child. Parents don't get to participate in that decision after they're gone.
Naming a guardian gives you a voice in a decision you won't be there to make yourself.
Choosing a Guardian Is a Personal Decision
Selecting a guardian can be one of the most difficult parts of estate planning for parents.
It's not necessarily about choosing the person you love the most. It's about thinking carefully about who would be able to step into the role of parent if necessary.
Parents may want to consider factors such as the person's relationship with their children, age, health, financial circumstances, location, parenting style, and willingness to take on the responsibility.
You may also want to identify a backup guardian in case your first choice is unable or unwilling to serve.
And don't assume that the person you've chosen knows your wishes.
Having a conversation with your chosen guardian can help ensure they understand what you're asking of them and give everyone an opportunity to discuss questions or concerns before an emergency occurs.
A sophisticated option that we love to incorporate into our plans is to rely on a Guardianship Panel. This is a group of people that you trust to make the decision on your behalf based on the circumstance at that time. It’s quite possible that the person you’d select to be Guardian for your child when they are four years old is very different from the person you’d select when they are sixteen years old. Naming a panel of trusted adults allows your panel to decide at the time of your death or incapacity who is best suited to care for your child.
Maybe Aunt Sally across the country is a great choice for your four-year-old because young children are bit more portable. However, Cousin Rachel is a much better choice at sixteen because your child gets to remain in their school district.
A Guardianship Panel creates flexibility and peace-of-mind.
An Inheritance Doesn't Have to Mean a Child Receives Everything at 18
Another important consideration for parents is how their children will inherit assets.
Without appropriate planning, a minor child who inherits assets may require someone else to manage those assets until the child reaches the age permitted under applicable law. Naming a minor child directly on beneficiary designations usually requires court proceedings called a Conservatorship (like Brittany Spears) to manage their inheritance until they are 18 years old. That entire time the inheritance is in a simple savings account unable to be invested in the stock market.
Even once a child becomes a legal adult, parents may not feel comfortable with their child receiving a substantial inheritance all at once at the age of 18 years old.
That's where thoughtful estate planning can provide flexibility.
Depending on your circumstances and goals, a trust may allow assets to be managed for a child and distributed according to terms you establish. You might want funds to be used for education, healthcare, housing, or other needs while allowing the child to receive greater control over the assets as they become older and more financially mature.
The goal isn't to control your child's life from beyond the grave. It's to provide a framework for managing the resources you've worked to build and giving your child the support they may need.
One of our favorite structures is to allow minor children’s inheritance to be pooled together while they are young and used for their benefit without concern for exactly equal distributions. Afterall, while you are raising them you aren’t thinking ‘oh I paid for John’s braces so I have to give Xander the exact same amount of money’. No, you’re just raising happy and healthy children. Let your Guardians do the same. The money is pooled together and used for their benefit until the youngest reaches a certain milestone (typically 22, or graduates college). Then the inheritance splits into separate shares.
We love to give young adults the ability to co-manage their inheritance with a trusted adult at a certain age (say, 21) and then the ability to solo manage it at another age (say, 25). This gives them some structure that prevents youthful indiscretions.
Whatever plan you ultimately create what is most important is that it is thoughtfully created with your specific children in mind. Your children are unique, your values are unique, and your estate plan should match your family. A solid estate plan should be as unique as you are; incorporating your values to ensure that your children are taken care of.
Estate Planning Also Matters While You're Alive
Estate planning isn't only about what happens after death.
Parents should also consider what would happen if they were alive but unable to make important decisions because of an accident, illness, or incapacity.
Financial powers of attorney can designate someone to handle financial matters on your behalf, while healthcare directives can communicate your wishes regarding medical care and identify who should make healthcare decisions if you cannot make them yourself.
For parents, this type of planning can be especially important.
If you become incapacitated, someone may need to access accounts, pay bills, communicate with schools or caregivers, manage property, or make important decisions for your family.
Having the right documents in place can make an already difficult situation easier for the people you trust.
In Washington and Oregon this can be especially important because your estate plan should include a standalone Child Care Power of Attorney. This is a document that allows a trusted individual(s) to swoop in immediately after something has happened to you and take custody of your minor children. They can make educational, medical, financial, or physical custody decisions on behalf of your child until a more permanent Guardianship is established.
This document is vital to keep your children out of temporary foster care systems and provide clarity when sometimes family members may be fighting about who should (or should not) retain control over your child. This document reduces conflict and friction in the time of the most chaos for your child. Even if you already have an estate plan double check that your plan includes a Child Care Power of Attorney!
Don't Forget About the Details That Matter to Your Children
An estate plan can address more than financial assets.
Parents may have specific wishes about their children's education, religious upbringing, medical care, family traditions, or other important aspects of their lives.
You may also have personal belongings that carry significant sentimental value, photographs, jewelry, family heirlooms, letters, or other items that may not have substantial financial value but mean everything to your children.
While not every preference needs to be legally binding, documenting important wishes can give your family guidance and context.
A letter of instruction or personal message can also provide something a legal document cannot: your voice. Incorporating your values is important and we take care every step of the way to ensure that your plan properly documents your wishes.
Your Estate Plan Should Grow With Your Family
Creating an estate plan when your children are young is an important first step, but it's not the last.
Your family will change over time.
Your children will grow older. You may have additional children. Relationships may change. Your financial circumstances may evolve. The people you originally selected as guardians, trustees, or decision-makers may no longer be the right choices.
That's why parents should periodically review their estate plans.
A guardian who was perfect for your two-year-old may not be the right choice when your child is a teenager. A family member you once relied on may have moved away or experienced changes that make serving as a trustee or decision-maker difficult.
Your estate plan should reflect your family as it exists today, not the family you had when the documents were originally signed.
Don't Wait for the "Perfect" Time
One of the biggest obstacles to estate planning is simply getting started.
Parents are busy. There are school schedules, activities, work, bills, vacations, and everything else that comes with raising a family. Estate planning can feel like something that can always wait until next year.
But there is no guarantee that next year will come.
Creating an estate plan doesn't mean you're expecting tragedy. It means you're taking responsibility for the people who depend on you.
The conversation may be uncomfortable. The decisions may not be easy. But having a plan can provide something incredibly valuable: clarity when your family needs it most. We have created a three step process that makes creating an estate plan as simple and as easy as possible. We’ve had clients be shocked at how quickly a plan can come together once they get the ball rolling. Seriously, the hardest part is getting started.
Protect the Future You've Worked So Hard to Build
As a parent, much of your life is spent preparing your children for a future you hope you'll be there to experience with them.
Estate planning is another way to prepare for that future.
It gives you an opportunity to make important decisions while you're healthy and able to do so. It allows you to choose the people you trust, establish how your assets should be managed, and communicate your wishes for your children.
Most importantly, it can help prevent your family from having to make those decisions in the middle of a crisis.
At Sunstone Planning LLC, estate planning is about more than documents. It's about understanding what matters most to you and creating a plan designed to protect the people and things you've worked so hard to build.
You can't predict what the future will bring. But you can make sure your family has a plan for it.
Because the greatest gift you can leave your children isn't simply what you own. It's knowing they're protected.