By Kevin R. Albaum
My wife and I had our first child in November of last year (Nina). Our first order of business, like many others, was to purchase more life insurance coverage. We thought that by purchasing more life insurance, Nina would be provided for financially and thus protected if we were to unexpectedly die. However, in order to adequately provide for and protect a minor child in the event of both parents dying, purchasing life insurance should be just the first piece of a puzzle.
Who Gets Custody of the Minor Child?
If both parents are incapacitated and/or deceased, under Florida law, any family member or other person interested in the welfare of the minor child can petition the local probate court to become the guardian of the person and guardian of the property for the minor child. This often leads to legal fights (with a minor child caught in the middle) between aunts, uncles, godparents, and grandparents regarding who the court will choose to raise the child and manage their inheritance until the minor child turns eighteen (18).
If avoiding that potential family feud is desired, parents can proactively name a preneed guardian for their minor child in either their last will and testament or in a declaration of preneed guardian document that is filed with the local clerk of court during the parent’s lifetime. Not only can parents name the preneed guardian but they can also expressly bar someone from ever becoming the guardian of the minor child. By naming a preneed guardian, if a guardianship case is ever initiated, a rebuttable presumption arises that the person nominated by the parents as the preneed guardian is entitled to serve as the guardian for the minor child.
Don’t Accidentally Give The Minor Their Inheritance at Eighteen
Under Florida law, a minor child cannot have more than $15,000 (in most situations) unless those funds are held in a guardianship of the property. When a guardianship of the property is in existence, there are legal expenses, court oversight of the spending, and the funds are often required to be held in restricted depositories. Additionally, a guardianship of the property terminates when a minor child turns eighteen (18). This means the minor child receives their entire inheritance on her 18th birthday.
Many parents plan to avoid the expense of a guardianship of the property and/or want to protect their children from accessing large amounts of money at age eighteen (18). This can be accomplished by crafting a last will or revocable trust to have an additional testamentary trust built into it that would hold the minor child’s funds in trust for a longer period of time. The parents also name a trustee (individual, professional, trust company) to manage the funds and make distributions to the minor child. If assets are structured to enter a trust for a minor child, they will not be subject to guardianship. The trust can be set up to hold the funds well beyond the time the minor child reaches the age of majority and the trustee will not have to distribute the funds to the minor child until the age the parents desire. I often draft testamentary trusts that terminate at age 25, 30, or 35 to avoid an 18-year-old receiving their entire inheritance too young.
If you desire to name a preneed guardian or set up your estate plan to protect your minor child, it is recommended to discuss your options with an estate planning attorney to determine the best way to structure the estate plan to meet your specific goals.