San Antonio Express-News
September 2, 2003

Will for Young Parents?

copyright 2003, Paul Premack

You are absolutely correct that estate planning is not limited to the senior citizen community. Estate planning is meant to acknowledge and carry through on the responsibilities people have and the commitments people make to others. Your granddaughter and her husband have each other, a child, a mortgage, and may have life insurance and other financial obligations. All of these call for legal planning.

They first need to get their Wills into place. They are probably going to leave their assets, including the house, to the survivor between them if either of them dies. The Wills must make it clear that the mortgage obligation is to be assumed by the survivor, so that payments will continue to be made.

Their Wills should also contain a plan regarding their child if both parents die together. The child, being a minor, does not have legal capacity to manage and to control an inheritance. The Wills should therefore contain a special contingency trust for the benefit of that child. Mom and Dad need to pick someone in whom they have full confidence, and to put that person in charge of the child’s inheritance as Trustee.

The Wills should also appoint a Guardian for their child, who will live with and be raised by the Guardian as surrogate parent. That is a huge responsibility, so they must discuss it with that person in advance.

They don’t need to pick the same people as both Guardian and as Trustee. The two jobs are different. Trustee handles the inheritance, managing the money and paying for the child’s health care, living expenses and education. Guardian, as the surrogate parent, receives funds from the Trustee to pay for those expenses. It may be convenient to pick the same person for both jobs, or they might decide to spread the responsibilities to different people who can work together.

Of course, they need to select several alternates for each position. The jobs could go on for many years – the Guardian’s job only ends when the child turns 18, and the Trustee’s job may continue until the child is 25 or even 30, depending on how long the parents want the inheritance to be supervised.

What if they fail to make proper Wills, and the worst happens? Their estates will be thrown into a court-supervised administration, and their child’s upbringing will be left to anyone in the family who a judge feels will act properly. The process will be more expensive than it would have been had they made proper Wills. They need to visit an estate-planning attorney to put these important plans in place. Next week I’ll talk about other issues they must consider, like life insurance and medical directives.