PLANNING FOR MINOR CHILDREN
SERVING FAMILIES AND INDIVIDUALS THROUGHOUT mandeville, louisiana and ALEXANDRIA, LOUISIANA AND THE SURROUNDING AREAS
Are you the parent of minor children? If yes, then they are your most valuable treasure. So, what arrangements have you made for their care should something happen to you and their other parent?
As with your own personal, health care and financial decisions, would you rather select the guardians (i.e., back-up parents) yourself, or let a probate judge make the selection without your input? Only through proper legal planning can you select the guardians. Under Louisiana law the legal guardian is called a “tutor” and the legal regime is called “tutorship.”
There are two critical choices commonly faced by parents of minor children. First, who will take care of my minor children, if orphaned, and, second, who will manage their inheritance?
If you are separated, divorced or never married to the surviving biological parent of your shared minor children, then that parent will continue to be their guardian (the “natural tutor”), absent a court-proven case of unfitness. Nevertheless, you will want to make prudent choices regarding tutorship should your minor children be orphaned.
While every family situation is unique, here are some general practical pointers to consider when selecting tutors for your minor children:
- Select a tutor who shares your faith, values and life priorities; and already has an established positive relationship with your minor children;
- Select an “undertutor” whose job it is generally to keep an eye on the tutor, and who will often take the place of the tutor in the event the tutor is not able to fulfill his or her responsibilities;
- Consider, when selecting a married family member, appointing the family member only, in case your family member predeceases or they divorce;
- Make sure your legal plans provide for the compensation of the tutor, or at least that the inheritance is available to cover all legitimate expenses incurred when rearing your minor children; and
- Obtain permission of the selected tutor before appointing the tutor in your legal instruments. That is only meet and right.
Great care must be taken when selecting a financial fiduciary to administer and distribute the inheritance. Simply put, a fiduciary is a person or institution legally responsible for the financial affairs of another. Fiduciaries are held to the highest standards of care and loyalty in this role.
So, who will manage any inheritance left upon your death? What if you and the other biological parent are divorced or were never married? Even though he or she may rear your minor child or children to adulthood, would you also want them to control the inheritance you leave behind, too?
There are three basic options when it comes to financial fiduciaries, each with its unique advantages and disadvantages.
Option 1 is the most common option. Here, you appoint trusted family members or friends. On the upside, they likely know the strengths and weaknesses of your loved ones, plus they may not charge much, if anything, to oversee the inheritance. On the downside, they may be busy with and distracted by their own life and financial responsibilities. Also, they may find it difficult to say “no” to an irresponsible heir.
Option 2 you appoint a professional fiduciary, such as an institution (e.g., a trust company) or an individual (e.g., your CPA). Interestingly, the upsides and downsides are the opposite of Option 1.
Door #3 is what I call the Pro-Am approach. You combine Option 1 and Option 2 for the best of both worlds. In short, the family appointee knows the strengths and weakness, has an “abominable no-man” to help preserve family relationships when the minor child asks for a Ferrari, and is not bogged down with investments, accounting, tax and legal details. Instead, the professional fiduciary shoulders (and is rightfully compensated for) the day-to-day management of the inheritance, playing the heavy when necessary.
As you can see, selecting guardians and fiduciaries is essential for the physical and financial well-being of your minor children. Few decisions in life are more important. Only you can make these decisions through proper estate planning.