No parent wants to imagine their children being raised by someone else should the unthinkable occur. In fact, it is often the reason that parents with children avoid estate planning. But without creating a will and other estate planning tasks, you will lose the option of naming the guardian of minor children and providing for their specific needs in a manner you see fit.
In creating an estate plan, there are several terms that parents will come across, such as guardianship, conservatorship, and trustees.
A guardian is one who is empowered by a court to care for a child who is considered by law to be too young to care for themselves. The guardian takes care of the child until he or she reaches the age of majority. A parent can name a guardian for minor children when they draft a will.
A conservator is legally empowered by a court to manage the financial affairs of a person, such as a minor child or an elderly person in failing health. A parent can name a conservator when they create a will. The conservator manages the assets of a child until he or she reaches age 18. A child’s guardian and conservator do not have to be the same person.
Although children under the age of 18 may receive gifts of property, such as cash or stock, and hold title to property, many state laws, including New York, limit their legal capacity to act on their own behalf. Children under 18 are unable to enter into binding contracts such as the purchase of real estate, credit card agreements, and loans. A custodian is a person named as the responsible party for managing the assets in a custodial account for the benefit of a child until he or she reaches a certain age.
A trustee named in trust documents is given the power to manage trust property and use it according to the purposes outlined in the trust agreement. Typically, a trustee is directed to use assets for the health, maintenance, support, and education for a child.
The trust agreement can indicate any age at which the trust terminates and the proceeds are distributed to the child. Many adults believe that age 21 is too young to give a person control of substantial sums of money or property, so they choose to establish a different age to terminate the trust and distribute the assets to a child.
Providing for the care and finances of minor children is a difficult process for parents. Working with an estate planning attorney can not only offer you options and choices, but can help you meet the specific needs for your situation.