Estate Planning in Pottstown & Phoenixville

As a mother of two young children, I am often surprised to discover that many of our friends and family who also have young children do not have an estate plan. When I ask them why, the response is often “I don’t have an estate to plan for.”  Many families with young children are just starting out and have not yet begun to accumulate wealth. However, estate planning during this stage of life is still very important. One of my biggest treasures in my life are my children, and establishing a plan for them in the event that my husband and I would pass away simultaneously is a big priority.

Additionally, I have found that many young parents fail to consider that if both parents would pass away simultaneously there may be term life insurance policies through employers as well as a 401(k) and other retirement accounts paying to their minor children and they need to plan appropriately for those assets.

Who can nominate a guardian for a minor?

In Pennsylvania, the law establishes a parent’s right to nominate a guardian for a minor in their Last Will and Testament, often referred to as a testamentary guardian of the minor. There are two types of guardians for a minor, the guardian of the person and the guardian of the estate.  Only a sole surviving parent can nominate a guardian of the person of a child; however, it is important for both parents to have this nomination in their Wills in the event that it is applicable. While only a parent can nominate the guardian of the person of a child, anyone can nominate a guardian of the estate of a child.

Guardian of the Person for a Minor: Who will care for your children in the event of both parents dying?

The guardian of the person is the individual legally responsible for the welfare and wellbeing of the child upon the death of the child’s natural parents. The guardian of the person for a minor is the individual who will care for the child’s physical needs. This person will be the one to provide a home for the child and to make decisions regarding the child’s education, religion, social needs, etc. A nomination by the parent can be made in the parent’s Last Will and Testament. Upon the death of both parents, the guardian of the person for the minor child must petition the court to confirm the nomination the parent made in his or her Will. As long as a natural parent is living and able to care for the child, no testamentary guardian of the person will be appointed. The testamentary guardian is only applicable where both parents are deceased.

It is important to note that the court is not bound by the appointment of a guardian in the surviving parent’s Will as the court will still determine what is in the best interest of the child. However, where no party of interest contests the appointment of the guardian, the nomination in the parent’s Will simplifies the process and makes the parent’s wishes known to the court.

Choosing a guardian of the person for your minor child is one of the most important decisions you will make. You must carefully choose a person that would be able to care for your child in the event of your death. Along with the nomination of a guardian in your Will, I also recommend writing a letter to the guardian to be kept with your Will that provides instructions on your wishes for the care of your child.

Guardian of the Estate of a Minor: How will the estate assets be passed to your children?

While only a parent can nominate the guardian of the person of a child, anyone can nominate a guardian of the estate of a minor child. Pennsylvania law provides that any person may, by last will and testament, appoint a guardian of real or personal property passing to a minor upon the decedent’s death. The purpose of the guardian of the estate is to appoint an adult to manage and oversee the money that the minor is inheriting until the minor obtains adulthood. Generally a guardian of the estate of a minor is only required where a minor is inheriting assets from an estate; however, other circumstances may give rise to a guardian needing to be appointed such as the minor being entitled to a law suit settlement.

Although important to nominate a guardian of the state for a minor, I never recommend leaving assets outright to a minor and relaying on the guardian of the estate. A guardianship will require that upon the child turning 18 the funds will be fully distributed to him or her. My recommendation is to establish a Minor Children’s Trust, which is discussed below.

What about your life insurance and IRA money, how should that be set up?

In addition to establishing a guardian of the person and estate for your minor children, it is also important to establish a Minor Children’s Trust for your children. The Trust can be a testamentary trust or an inter vivos trust. However, where you will have assets such as 401(k)s and retirement accounts passing to minors it is my recommendation to establish an inter vivos trust that has the necessary tax language in the trust to receive tax advantages.

The purpose of the Minor Children’s Trust is to name a Trustee to manage the money on behalf of your children until they obtain a specified age. You also can establish guidelines for the Trustee with regard to distributions. You can provide broad discretion to your trustee to make distributions as they deem advisable, or you can limit the Trustee’s ability to distribute funds for the child’s education or health. Establishing a Minor Children’s Trust opposed to naming your minors outright as the beneficiary and relying on the guardian of the estate to manage the funds provides more flexibility and less court oversight.

Estate planning for young families is important regardless of the size of your estate. Every parent of a child should have a Last Will and Testament and a Minor Children’s Trust. If you are a parent with young children and have not yet established a Will and Minor Children’s Trust, contact O’Donnell, Weiss & Mattei, P.C. We have the experience and expertise needed to guide you through the estate planning process in Pottstown or Phoenixville PA and establish your inter vivos Minor Children’s Trust.

Contact us today – or visit us at our offices in Pottstown or Phoenixville.

This article was written by: Rebecca A. Hobbs, Esquire

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