Should we update our estate planning now that we have children? – Estate Planning Attorney – Portland, Oregon.

African American FamilyHaving minor children affects your estate planning significantly. You should consider who would care for your minor child and also who would manage assets for your minor child’s benefit if the parent(s) dies unexpectedly.

If the unthinkable were to happen and the parent(s) of a minor child were to pass away, your first concern would be for the child’s general welfare and living situation. Someone would need to be appointed as the child’s legal guardian. You can express your wishes regarding who should serve as guardian in provisions contained in your will. While a judge would ultimately decide the most suitable person to serve as guardian, your wishes would be given due consideration. Once appointed by a court, the guardian would have complete authority to decide where the child would live and have access to the child’s health care information in order to make health care decisions on behalf of the child. The guardian would be required to file an annual guardian’s report with the court.

For financial matters, someone may need to be appointed as the child’s legal conservator. You could express your wishes about who should fulfill this role in your will, but a judge would make the final determination. A conservator would have authority to manage assets for the child’s benefit. An annual accounting would usually need to be submitted to the court. It is important to understand that if you have named a minor child as a beneficiary of a life insurance policy, retirement account, or other beneficiary driven asset, the insurer, custodian, or financial institution will not pay out to a minor. The insurer, custodian, or financial institution would require a conservatorship be established for the minor child and pay funds to the conservator.

Both a guardianship and conservatorship for a minor child would terminate once the child becomes an adult. This can leave the young adult with little or no guidance on how to manage finances and health care.

You may be able to avoid the time and expense of a conservator by specific estate planning. Your will or revocable living trust could contain a sub-trust for a minor child’s benefit. The trust would be funded at your death from trust assets and/or beneficiary designation(s) pointing to the sub-trust. The trustee of the trust would be in charge of managing trust assets for your child’s benefit. An insurer, custodian, or financial institution would make payment to the trustee of such a trust. With proper planning, the sub-trust would eliminate the need for a conservatorship because there would not be any assets outside the sub-trust that needed to be managed by an adult. An additional feature of the sub-trust could be an incentive for the child to obtain a college degree or complete a course of training leading to gainful employment. The terms of the sub-trust would direct the trustee in paying for educational expenses and possibly allow for a partial distribution of trust principal at the completion of the degree or course of training as an incentive to the child.

Unlike a guardianship and conservatorship, a sub-trust can remain in effect past age eighteen. The trustee would continue to manage the trust for the young adult’s benefit until some trigger age you have predetermined, age thirty-five for example.

At minimum, your estate planning should include provisions for making distributions to a minor child or young adult in the form of a Uniform Transfers to Minors Act (UTMA) account. Your will or trust would direct that the personal representative or trustee to nominate a custodian for the UTMA account and help establish the account and ensure it was funded properly. In Oregon a UTMA account can remain in effect until the beneficiary reaches age twenty-five (25).

An experienced Estate Planning attorney can help you understand the additional layers of planning you should consider when you have a minor child and assist you with drafting the appropriate documents to meet your goals. Contact the Estate Planning attorneys with the Law Offices of Nay & Friedenberg in Portland, Oregon at (503) 245-0894 to set an appointment.

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