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Why It’s Important To Protect Your Young Children Through Estate Planning

In New York there are two types of guardians, a Guardian of the Person and a Guardian of the Property. The Guardian of the Person makes all decisions about the child’s health, education, and general welfare. The Guardian of the Person will make all school decisions, decide where the child lives and generally be in charge of raising your child. The Guardian of the Property handles the child’s assets, if any, under the direction of the court. The Guardian of the Property must get court approval for expenditures and must provide the court with annual accountings of the child’s assets. The Guardian of the Person and the Guardian of the Property do not have to be the same person. In this article I will use the word “guardian” to refer to the Guardian of the Person, unless otherwise noted. As will be discussed below, with a well drafted estate plan you can have a trustee serve as Guardian of the Property with much less input and oversight from a court.

If you die, the other parent is the guardian of your child. Even if you are divorced and you are the custodial parent, pursuant to New York Domestic Relations Law §81, a custodial parent cannot appoint a guardian that will take priority over the surviving, non-custodial parent. But what happens when both parents die?

 

Dying Without a Will

Simply put, if you and the other parent of your child both die, without leaving direction as to who should assume guardianship of your child, a court will decide who becomes your child’s guardian. §1701 of the New York Surrogate’s Court Procedure Act (“SCPA”) gives the court the authority to appoint a guardian of the person or a guardian of the property of a minor child. The court will be tasked with determining what is in your child’s best interest. Yes, that means, there is a chance, however small you may think it is, that a judge can determine it is in your child’s best interest to have your mother-in-law appointed guardian. I am being slightly facetious, but the point remains, anyone can petition to be your child’s guardian. There are only two criteria to apply to be a guardian of a child, (1) you must be over the age of 18; (2) you must be a citizen of the United States; that’s it. It is then the court’s job to pick from the people who petition to be guardian. As I alluded to, the court will pick a guardian for your child by using the “best interests of the child standard.” Essentially, the court must weigh the applications of people who petition for guardianship and determine who among the applicants would be best as guardian for your child. Having served as a judicial law clerk for a judge who dealt with appointing guardians for children in child neglect cases, I saw first-hand how judges pain over the decision of who the best guardian for a child would be. So, there is no doubt in my mind that courts seriously weigh the different options to determine a child’s best interest when choosing a guardian. However, no decision will be weighed as heavily, considered, pained over, and as well thought out as the decision that you make with your spouse. Also, by not naming a guardian for your children, you leave it up to your family and friends to “throw their hat in the ring,” meaning the person who may have really wanted and may have wanted to do it, may not petition for guardianship. Remember, the court can only choose from the people who petition to be guardian.

If you die without a Will, and you are not survived by a spouse, your children will receive all of your assets. Those assets will be administered, under the approval of the court, by a guardian of the property, who must seek judicial approval for all expenditures. When your child reaches the age of majority, which is 18 years old in New York, they will receive all of the assets, or their share of all of the assets outright. If you and your spouse have significant assets, or a significant life insurance policy, your child could be handed a lot of money at 18 years old.

 

Dying With a Will

The single most important provision in the Will of someone with minor children is the guardianship provision. The guardianship provision will appoint someone as the guardian for your minor children, should both you and your spouse die. However, to be clear, your Will disposes of your property and children are not property. So, pursuant to SCPA §1710 whomever you appoint as guardian for your children, must still petition the court to be appointed as guardian. However, whomever you appoint will receive a very favorable view by the court and is likely to be appointed. In this instance, the court wants to do its own vetting of the potential guardian, such as a criminal back ground check, to make sure you haven’t appointed someone that will not be in the best interests of your child. Again, great weight is given to whom you appoint as guardian in your Will. Also, again, the person you appoint must petition the court to be appointed as guardian, meaning if they do not want the job, they do not have to petition the court. You cannot force someone to be the guardian of your children by appointing them in your Will.

Besides getting to choose the guardian for your child, another benefit of creating a Will is being able to address the disposition of your assets to your children. For example, instead of leaving your property to your children outright, you can leave the property in a trust. One option is to leave the property in a trust for their benefit, where the trustee can make distributions for things they need, and then they will receive principal distributions at various points of their life, such as one-third of the trust principal at age 25, one-half of the trust principal at age 30 and the balance of the trust principal at age 35. The theory being, they money will be available to them over a longer period of time, and if they spend all of the principal distribution they receive at age 25 or 30, they still have another principal distribution coming. Another option is to leave your assets to your children in a trust that goes on for their entire lifetime. The trust can provide for income distributions to the child and give the trustee discretion to distribute trust principal to the child. A lifetime trust can provide the child will creditor protection over the trust assets, i.e. creditors cannot attach the trust principal and force the distribution of the trust assets to them, and protection in the incident of divorce, in that the trust assets should be considered a separate non-marital asset, not subject to division in a divorce proceeding.

Another benefit of a trust, is that you choose the trustee, rather than the court choosing the guardian of the property. This way, you can choose the best person to manage your children’s assets. Also the trustee has much more latitude in managing the trust, but is still bound by fiduciary obligations, than a guardian of the property, who needs court approval for all expenditures.

Basically, having a Will allows you to make key decisions in your child’s lives, in the event, you die while they are minors. You can appoint a guardian to raise them in your absence and appoint a trustee to manage their assets, and you can hold those assets in a trust, in order to preserve them for your children for as long during their lifetime as you wish.

 

Who Should I Choose as Guardian?

Choosing who should have the responsibility of raising your child, if you are unable to, is not easy and rarely there is a simple answer. Some general guidelines to consider are (1) the age of the potential guardian, the guardian or guardians that you choose will be legally responsible for raising your child until your child reaches the age of majority, 18 years old in New York, so although great-grandma has the time and energy now, she may not be the best long term choice; (2) the amount of children the people you choose already have, many people want to pick the aunt or uncle who has no kids to be the guardian, with the thought that junior will be less of a burden to people who do not have other child rearing responsibilities. But what if that aunt or uncle does not have children for a reason, such as they only enjoy children in small doses? Or some people want to choose the cousin who loves kids, so much so that she has 7 of her own, is adding your children to that brood ideal? (3) religious/ political/ outlook on life/ lifestyle, if you absolutely want to make sure your children continue to go to church every Sunday, then choosing your friend the atheist is not wise. Sure, it would be ideal for your guardian to raise your children exactly how you were raising them, and at first they might, but ultimately they likely will revert back to their own lifestyle and raise your children in that lifestyle.

These factors are obviously not an exhaustive list, but are rather meant as a jumping off point. Ultimately, you and your spouse will need to weigh the pros and cons of all of the people you know and come up with the best option. Remember, there will not be perfect choice, that person is you and you’re gone. Also, you can always change the provisions of your Will, as long as you have capacity, so, as with all aspects of your estate plan, a periodic review of who you have chosen as guardian for your children, as well any trustee appointments, is highly recommended.

Choosing a guardian for your children is one of the most important decisions you can make. Along with choosing a guardian, structuring your estate plan to best provide for your children is essential. The estate planning attorneys at Twomey, Latham, Shea, Kelley, Dubin & Quartararo are available at your convenience to walk you through your options to best plan for your children, answer your questions, review your current estate plan to ensure it continues to meet your needs or to discuss the implementation of an estate plan that will protect your children’s interests.