The arrival of a new child, either through birth or adoption, can be an exciting time. Among the dramatic life changes, it is easy for new parents to put off taking care of their legal arrangements. New parents should review their legal plans without delay after a new child arrives to ensure that their spouse and child are taken care of if the parent passes away.
Guardianship
Perhaps the most important task is naming someone to permanently take care and custody of the children in case both parents pass away. This person is called a “guardian,” and you can name one in your Last Will and Testament. The guardian can be charged with taking care of the child’s person (a “Guardian of the Person”) and/or the child’s property (a “Guardian of the Property”). However, it is usually better for the child’s property and inheritance to be managed under a testamentary trust, because under Tennessee law a guardianship will usually automatically end when the child reaches the age of eighteen. Trusts can also contain detailed instructions as to how the inheritance is managed and spent.
There are several potential considerations when choosing guardians and backup guardians:
- Do the proposed guardians share your worldview and religious beliefs?
- Do the proposed guardians have a stable domestic home life?
- How many other children are they currently taking care of?
- What is their approach to discipline and parenting?
- How attentive are they to safety matters?
- How old are the proposed guardians now, and how old will they be when your child graduates high school? Do the math!
- Is the guardian willing to serve? Encourage them to be honest!
Testamentary Trust
If you are leaving an inheritance to a child, you obviously do not want them to have direct control of the inheritance. Usually, you will want to have someone else manage it, and you may want to leave detailed instructions on how the inheritance can be spent and under what terms.
You can create a testamentary trust through a provision of your Last Will and Testament that details how your child will receive their inheritance. In your Will, you can name a person or corporation to manage your child’s inheritance until they reach a certain age (such as 25). The manager of the trust is called the Trustee. You can specify that the Trustee may use the inheritance for the child’s support, healthcare expenses, or education.
Key considerations for naming a Trustee are financial responsibility and stability, honesty, diligence, and ability to be or become familiar with the various family dynamics and unique circumstances.
Life Insurance
If a young parent passes away, there can be tremendous financial pressure on the surviving family (in addition to the obvious emotional toll). The surviving spouse must deal with the possible loss of the deceased spouse’s income. There may be a mortgage with several years or even decades left to pay. If the surviving spouse has to take a job, there may be childcare expenses to consider. There may even be residual medical bills from the deceased spouse’s care.
Unless the young couple has had early financial success or a windfall (such as an inheritance), the young couple will usually not have enough savings to take care of these concerns. However, this problem can be solved by using life insurance policies and through carefully preparing the life insurance beneficiary designation forms.
Planning for “Just in Case”
Carefully planning for guardianship, trusts, and life insurance can go a long way toward ensuring that your children are taken care of according to your wishes should something happen to you. As the saying goes, it is good to plan for the worst, and hope for the best, when it comes to legal planning for your children.