July 12, 2016
Leaving Property and Money to Minor Children in Michigan
Here at The Elder Care Firm of Christopher J. Berry, Esq., CELA, our entire legal team is passionate about helping parents name legal guardians for their children. It’s a critical step that allows parents to document the people they want and trust to raise their kids if they are incapacitated or unexpectedly pass away.
But, there is another area of planning for children that many parents overlook—and that deals with the issue of money and property. Who will be in charge of managing an inheritance, or keeping the child’s money safe from being lost or squandered if the parent(s) pass away?
In a lot of cases, estate planning for married couples is easy. You leave everything to your spouse. Then the surviving parent will take care of the children. But, what happens if something happens to both parents? Or if the parent is single? In many cases, the parents’ answer is that an inheritance simply “goes to the children” when they are gone.
Unfortunately, this answer is neither simple, or entirely possible, really. What vulnerable beneficiaries (minors or young adults) usually require is for someone else to be named to manage whatever they inherit because they are either too young (as in the case of a minor) or too immature to manage it themselves.
In some cases, parents will ask the people named as guardians to also be responsible for their children’s money and property – but not always. It is quite common for the responsibility for their welfare to be managed by a different person.
If this is the case and you don’t specifically name someone to manage finances for your children, the Michigan Probate Court will do it for you by appointing someone to serve as the children’s property guardian. In this case, the property guardian selected by the court has to report frequently and has limited authority to make decisions. And, the judge may choose someone that is a complete stranger to the family, or someone you would never choose. That is what’s at risk if a parent does not properly document their wishes in the event they unexpectedly pass away.
In the case of children who are 18 or older, its important to differentiate that they will have complete control of the property and money that you leave them. This may sound reassuring and less complicated than leaving property to minor children… but take a moment and think back. Were you in a position to make sound financial decisions when you were 18? Probably not. So, you should consider raising the age at which your child gains financial responsibility if you do not want to take the risk that your child’s inheritance will be mismanaged, lost or squandered on things like fast cars, clothes and lavish trips.
Utilizing a living trust is the best way to put “speed bumps” and “checks and balances” around your children’s inheritance so that they do not receive a lump sum of money outright before they are mature enough to handle it. Again, you will be able raise the age or lay out key milestones in which the child(ren) receive their money and specify a trustee who will again oversee the distribution of funds for your child(ren) according to your wishes for their future and how their inheritance is to be spent (i.e. on a college education, first house, wedding).
Luckily, all of this is easy to do if you work with a qualified guardianship attorney here in Michigan. In our office, we have a unique system that walks parents step-by-step through the decision-making process so that they are able to choose the best people to serve as their child’s property manager and/or legal guardian.
Our guardianship lawyers in Michigan are here to serve you. Make an appointment right away so you can legally document who will serve in these two very important roles in your children’s life if the unthinkable happens.