By Jeffrey J. McKenna

In doing estate planning, you should remember that your most precious asset is your family, especially if your family is comprised of minor children.

There are two primary concerns regarding minor children and estate planning. First, who is going to take care of the children? Second, who will take care of the financial needs of the children? This may or may not be the same person (or institution). The person responsible for the children’s financial matters may be a court appointed conservator or if estate planning was done prior to death, it could be a trustee of a trust established for the children’s benefit.

Significantly, children under age eighteen cannot legally “own” property. Therefore, in order to have life insurance proceeds or any other assets of an estate distributed to a child under age 18, a conservator must be appointed by the court. The legal proceedings required to get a conservator appointed can be at best an additional expense and inconvenience. But thought these proceedings may be unappealing, the worst part about failing to plan for minor children may be what happens when they ultimately receive their inheritance.

A conservatorship ends when the child reaches age 18 unless special circumstance exist. The result is that at age 18 the child now has complete control over the assets. While parents or grandparents may envision their life insurance or other assets of the estate being used for their children’s or grandchildren’s education, church service, or other purposes, children at age 18 or 21 may have other plans.

Given these uncertainties, parents and grandparents should consider the use of a trust when minor children are beneficiaries. A trust has many advantages. First, assets can be distributed to the trustee of the trust for the benefit of the minor child. The trustee would then manage the assets as specified in the trust document. Parents can specify that proceeds within the trust are always available for the children’s health, education, maintenance and support and that the proceeds will not be distributed outright to the children until the children reach a particular age.