You dream of watching your children grow up: their first day of school, first dance, and their high school graduation. Very rarely does the thought you won’t be there for those milestones creep into your mind. However, parents of minor children need to plan for the possibility they may die before their children reach adulthood.
Minors don’t have the legal status to make decisions about their care and finances, so an adult must act on their behalf. Generally, the two most important concerns for parents are who will be their child’s guardian, and who will manage the finances.
Without a plan in place, the court must appoint a conservator to manage the minor’s assets. Fortunately, through basic estate planning, you can avoid a conservatorship. If parents plan ahead, they will have the freedom to choose who will care for their child and manage their finances. Parents may also dictate what level of control a guardian has, and whether they act as a custodian or trustee.
A custodian may hold money in an account until the child turns 25. This option is less formal than a trust. A custodian has more leeway on how the money is managed, and they are not required to provide annual reports unless requested. Also, there is no third party oversight, so there is a greater risk of abuse of assets.
Parents may also establish a trust. A person, bank or trust company can be named as the trustee to manage the child’s money. A trust includes guidelines for how the money will be used, as well as when the trust ends. Oregon law also has checks and balances in place designed to avoid the funds being abused or mishandled.
No parent wants to believe they won’t see their child grow up. However, you must plan for all scenarios. The Pacific Cascade Family Law team knows the importance of estate planning and could help you create a stable plan for your child’s future.