Planning for Minor Children

Serving Clients throughout Farmington, Layton and Bountiful, Utah and the Surrounding Areas



Are you the parent of minor children? If yes, then they are your most valuable treasure. So, what arrangements have you made for their care should something happen to you and their other parent?

As with your own personal, healthcare and financial decisions, would you rather select the guardians (i.e., back-up parents) yourself, or let a probate judge make the selection without your input? Only through proper estate planning can you select the people to manage the physical, emotional, and healthcare decisions of your children (a guardian) and someone to manage the care of assets and financial matters for your children (a conservator or trustee under a trust for the benefit of your children—we’ll call them a “financial fiduciary” here).

Selecting a Guardian for your Minor Children

If you are separated, divorced or never married to the surviving biological parent of your shared minor children, then that parent will continue to be their guardian, absent a court-proven case of unfitness. Nevertheless, you will want to make prudent choices regarding guardianship should your minor children be orphaned (yes, we think it is important for you to designate a backup guardian in case their other parent dies, becomes incapacitated, or is unfit). We have seen numerous heartbreaking cases involving failures of designations of guardians.

While every family situation is unique, here are some general practical pointers to consider when selecting guardians for your minor children:

  • Select guardians who share your faith, values and life priorities; and already have an established positive relationship with your minor children;
  • Consider, when selecting a married family member, appointing the family member only, in case your family member predeceases or they divorce;
  • Make sure your legal plans provide for the compensation of the guardians, or at least that the inheritance is available to cover all legitimate expenses incurred when rearing your minor children; and
  • Obtain permission of the selected guardians before appointing them in your legal instruments. That is only meet and right.

Selecting a Financial Fiduciary for your Children

Great care must be taken when selecting a financial fiduciary to administer and distribute inheritances. Simply put, a fiduciary is a person or institution legally responsible for the financial affairs of another. Fiduciaries are held to the highest standards of care and loyalty in this role.

So, who will manage any inheritance left upon your death? What if you and the other biological parent are divorced or were never married? Even though he or she may rear your minor child or children to adulthood, would you also want them to control the inheritance you leave behind, too?

There are three basic options when it comes to financial fiduciaries, each with its unique advantages and disadvantages.

Option 1—The Family or Friend Financial Fiduciary. Most of our clients, and most people generally, seem to select a trusted family member or friend. They likely know the strengths and weaknesses of your loved ones and they may not charge much, if anything, to oversee the administration of the inheritance. On the other hand, they may be busy with and distracted by their own life and financial responsibilities. Also, they may find it difficult to say “no” to an irresponsible heir.

Option 2—The Professional Financial Fiduciary. Some clients prefer not to appoint a family member or friend as a financial fiduciary, and instead appoint a professional fiduciary. A professional fiduciary might be an institution. Most banks and financial institutions have or are affiliated with a trust company—ask your trusted banker, broker, or financial representative and they’ll likely hand you a brochure about trust services offered by their institution. A professional fiduciary might be a professional advisor. Sometimes, a lawyer or accountant may be selected to serve as a financial fiduciary. Interestingly, the benefits and detriments of a professional fiduciary are the opposite of Option 1. Professional fiduciaries are generally focused on proper administration (tax returns are filed property, financial reports are prepared timely, assets are professionally managed, etc.) and will not have difficulty saying “no” to an irresponsible heir. On the other hand, they will charge for their services and may not be well-acquainted with your values and how you would like an inheritance distributed to your children.

Option 3—The Pro-Am Approach. You might try to combine Option 1 and Option 2 for the best of both worlds. In short, the family appointee knows the strengths and weakness, has an “abominable no-man” to help preserve family relationships when the minor child asks for a Ferrari, and is not bogged down with investments, accounting, tax and legal details. Instead, the professional fiduciary shoulders (and is rightfully compensated for) the day-to-day management of the inheritance, playing the heavy when necessary.

As you can see, selecting guardians and fiduciaries is essential for the physical and financial well-being of your minor children. Few decisions in life are more important. Only you can make these decisions through proper estate planning.

Document Library

Documents covering topics from Estate Planning, Elder Law and Probate.

Learn More

Document
Library

Read Our Blog

Explore our blog for insightful articles pertaining to Estate Planning, Elder Law, Probate and more.

Learn More

Read Our
Blog

Newsletter Subscription

Sign up for our monthly newsletter on topics from Estate Planning, Elder Law and Probate.

Learn More

Newsletter
Subscription

Meet Jason Hunter

Jason Hunter practices in the areas of estate planning (including estate and trust administration and asset protection), business planning/transactions...

Learn More

Meet
Jason

We’d Love to
Talk with You

* required information


Main Office:

Phone: (801) 438-6030

Email: jhunter@sagelawpartners.com

Address: 140 N. Union Ave, Ste 220
Farmington, UT 84025