If you have minor children and are having a will prepared, you are faced with the challenge of deciding whom you will appoint as Guardian for your child. It is important to remember it is not only the people you choose, but also how you distribute your assets that will affect how your child is provided for after your death.
Most people will appoint family members, such as siblings for example, as Guardians for their minor child. Because of the trusting relationships between siblings you might be tempted to leave your assets to the Guardian so that they can use them for the benefit of the minor child. If you trust someone enough to care for your child, then hopefully you feel they would use your assets for the benefit of the child.
You should be cautioned however, that by giving the whole of your estate to the Guardian they, not you, would have ultimate control over how the money is spent. In the worst case scenario, this could mean your child would not benefit at all fro m any money you might leave him/her. If the Guardian were to squander your money, the child would have the right to sue the Guardian for a breech of their duty to them. But if the Guardian did not have any money, it would be difficult to collect damages from them, not to mention how this would affect the family relationships.
As a way around this, the money can be left in trust for the minor child. This means that the money is invested where it earns interest, and a sum may be paid toward the care of the child on a weekly, monthly, or yearly basis. In this way you are able to control the amount of money paid out of the trust fund so that there may be money left for the child when he/she reaches the age of majority (depending upon the size of the estate).
There are several options for establishing how payments are made from the trust fund. You could set a monthly amount that changes as your child grows and becomes involved in extra-curricular activities. You could establish a provision that allows the Guardian to ask a third party for extra money should some special expense arise for a child, such as a school trip or braces. You might want to establish separate trusts for university education or to help your child buy their first home. There are many other innovative options that a testator might choose to provide for their minor child.
Tracey Kennedy is a Partner at Kennedy Schofield Lawyers. Articles posted on this blog are meant to offer general information and should not be relied upon as legal advice. For advice on your specific matter, contact Tracey or any of our lawyers at 902-826-9140.