Leaving Your Assets to a Trusted Adult to Care for Your Child is a Mistake
I recently met with a potential client who had created his estate plan just after his son was born. He had every intention of taking care of his son. But this trust cut his son out of the picture: 70 percent of his assets went to his girlfriend, the child’s mother, and the remaining 30 percent was divided among his parents and siblings. His son was provided for only as a contingent beneficiary. What does that mean? This child would only receive an inheritance from his father, potentially millions of dollars, if he first lost his mother. Additionally, the trust terminated on his 18th birthday. A child with no parents would receive millions of dollars on his 18th birthday, regardless of his ability to responsibly manage so much money. There was another blind spot in this trust package: incapacity. There was no provision for continued voluntary support payments to the mother should the client become incapacitated, leaving both mother and son exposed to financial hardship before the father’s death.
Before we discussed his assets, this potential client was surprised when I asked him some basic but fundamental questions. “Who do you love?” “Who do you trust?” “Who are you responsible for?” I asked him what opportunities he wants his son to have as he grows up. He was thrilled to learn that I could draft a trust that would provide his son with guidance and structure, and reflect values important to the father — sportsmanship, entrepreneurship, musicality, and independence — while protecting the trust assets from creditors until his son decided to terminate the trust.
Giving his girlfriend his assets to take care of their son exposed those assets to risk. The boy’s mother could be found liable in a lawsuit, or she could suffer a major medical condition, exposing her inheritance to liens.
My guardianship nomination form is extensive, typically 5 to 8 pages after a parent provides information to customize the document. It lists guardians and back-up guardians. It allows a client to describe their desires for their child’s education and future. This father was thrilled to learn that he could provide guidance on encouraging team sports and camps and structured musical education. With this guardianship form, his son’s mother would have a document that lists the father’s various traditions and the people important to the him. This form would continue to provide her with support to better care for their son and to keep the child’s father’s spirit alive.
If your attorney asks you a lot of questions about yourself, your values, and the people in your life — including their personalities, positive attributes, frailties, and struggles — then you can trust you’re in good hands. Your estate plan does more than state who gets your assets when you die. Your estate plan is an opportunity for you to share your values and express your love for and trust in the people who are most important to you. I am honored to have helped this father and all my clients.
Patricia De Fonte
Principal, De Fonte Law PC