Individuals and Families with Minor Children
Personal Planning Topics
Intro Copy Goes here
Selecting Guardians
Considering your children are the greatest gift God has given you stewardship over, choosing the right guardians is the most important decision you’ll make as you develop your estate plan. Below are three key factors to consider when choosing guardians:
- Choose Christian guardians. As a believer, you’ll naturally want your children to continue to be brought up in God’s Word and in His ways.
“Train a child in the way he should go, and when he is old he will not turn from it.”
Proverbs 22:6 (NIV)
- Consider choosing a Christian couple that lives nearby. This is usually not a critical factor when children are under age 10 or haven’t lived in the same community for a long time. However, when children are in their teens and have been in the same community for a long time, it might be a good idea to keep them in that community for support during a difficult time of loss.
- Choose guardians who are also in the "raising children" mode of life. Guardians who are already parents of children may be better equipped to handle the transition of adding new children to the family in such circumstances. Children can greatly benefit from entering a home situation that is already set up to care for children. In addition, if you are deeply committed to homeschooling, you may consider choosing another homeschooling family to be the guardians of your children. While many families consider choosing grandparents as guardians, those grandparents are already in the children’s lives and may have a more beneficial impact as grandparents.
Each state has its own laws governing who will qualify to be guardians of your children. In some states, you may be prohibited from choosing guardians who live outside your state unless they’re a blood relative of the child. It’s also important to note that many states will give considerable weight to a child’s personal wishes if the child is 14 years of age or older. Be sure to carefully discuss your state’s laws regarding guardianship with your attorney.
Don’t be nervous or afraid to ask another person or couple to be guardian(s). Keep in mind that you can always offer to do the same for them. As Christians, we can stand in the gap for each other.
“Religion that God our Father accepts as pure and faultless is this: to look after orphans and widows in their distress…”
James 1:27 (NIV)
Custodial Accounts
A custodial account enables parents to appoint a custodian to manage a child’s inheritance until the child reaches the legal age of maturity, which is 18 in most states. Each child would have their own custodial account, with those funds being available to the custodian to use for their care and support. When the child reaches legal age, they have access to all remaining funds in their account.
With a custodial account, the shares are kept separate, which does not allow for financial care to be assessed based on unequal needs among your children. It also may not be a wise financial practice to give your child their entire inheritance the day they reach 18. If you want to safeguard against these two things, a Children’s Trust is a great option to pass along your financial wisdom.
Including A Children’s Trust
A Children’s Trust is designed to provide for your children and then split things equally when your youngest child is no longer a dependent. This ensures that each child’s needs have been met before any inheritance is distributed. Once the children are considered adults, you can then begin to divide what’s left between them and the ministries you love. However, you want to be careful that the children don’t get too much too soon.
“An inheritance quickly gained in the beginning, will not be blessed in the end.”
Proverbs 20:21 (NIV)
One way to avoid too much too soon is to distribute the trust in increments. For example, one-third when the youngest turns 25, half of the balance when they turn 28, and the remainder when they turn 30. Some parents also divide the trust when their children turn 25, 30, and 35 or even 30, 35, and 40. There’s no right or wrong answer – it’s simply your personal preference.
It is also important to prayerfully consider who will be the trustee of a Children’s Trust. Many couples have guardians who also act as trustees. A major benefit of this is that you have likely chosen a guardian who shares and/or respects your values and can incorporate those into any discretionary distribution decisions. However, this also subjects the trustee to accusations of impropriety from other family members. If you have concerns about this, you may opt for a separate trustee, either another family member or even a corporate trustee.
Most free estate planning software, including ours, is not equipped to include a Children’s Trust provision in your will. If you are interested in providing for your children using a Children’s Trust, please contact our Gift & Estate Design team to discuss this option in depth and learn how to draft your documents to include this.
Life Insurance
Having sufficient life insurance coverage is especially important when you have minor children. Your life insurance should be able to provide for your family if something happens to either parent. Would the primary earner need to leave their job and stay home with the children? If so, for how long? Would supplemental childcare be necessary for the surviving spouse? Your life insurance should provide for these possible needs, and equal coverage for both spouses should be considered. If adding more life insurance to your estate is a cost concern, consider a term policy to provide coverage until your youngest reaches legal adulthood.
Charitable Giving & Tax-Wise Planning Concepts
While your children are still dependents, providing for their physical and spiritual well-being is most important when allocating your assets. Once they have reached the age of maturity, it’s a good time to review your estate plan and determine if more of your assets are available to support Kingdom work.
Click here {goes to resources section or PDF} if you are interested in adding charitable giving to your current estate plan, making a charitable gift now, or learning about how to include charitable giving in a tax-effective manner in the future.
Prayer and Action Items
☐ Decide who to appoint as primary guardians and at least one alternate guardian.
It is recommended to discuss your ultimate decision with these guardians to ensure they intend to accept this role.
☐ Decide whether you would like to provide financially for your children with a custodial account or a children’s trust.
If you opt for a children’s trust, please contact an estate planning attorney for assistance with drafting your documents. To discuss this option in more detail or get references for Christian estate planning attorneys in your area, please contact our Gift & Estate Design team.
☐ Determine if you would like to increase your life insurance coverage.
We recommend reaching out to your local life insurance representative to discuss your options.
To download the Prayer and Action Items PDF, click here.
Next Step: Ways to Transfer Stewardship
Click the button to learn about your options for how to transfer stewardship of your resources.
