You are young, in love, and married with a baby on the way (or already here). Ah, to be young and starting a family again. Now you really have some responsibility. Have you thought about who is going to take care of those cute little children if something should happen to one or both of you?
Just as we go through different stages in life, so too do we have different stages of financial and estate planning in Florida. Being married and having minor children should make us stop to think about who will take care of our children if something happens to one of us. Because a sudden illness and/or passing may incapacitate you as a parent, planning should be put in place to nominate a guardian for your minor children (via a Designation of Guardian for Minor Children), as well as someone to manage your assets for your children (via a Durable Power of Attorney), and someone to make healthcare decisions for you (via a Living Will and Health Care designation).
Instead of a simple Will, the husband and wife could prepare a Will with Testamentary Trust provisions for minor children. The Will has two provisions for the children: 1) a suggestion of guardian over the physical placement of the children; and 2) an appointment of a Trustee over the monetary assets of the children. If both parents were to pass away suddenly, the court would consider appointing the guardian over the person of the children for purposes of health, maintenance and welfare of the children. This would enable the guardian to deal with day to day matters such as school placement, medical treatment, and other similar matters.
The court would also appoint a Testamentary Trustee pursuant to the Testamentary Trust language in the Will (so this gets established at the death of both spouses, not during your lifetime). The Trustee would operate pursuant to the Testamentary Trust provisions, which normally state that the Trustee can pay for any bills related to health, maintenance and welfare of the children through the age of minority with distribution of principal amounts at ages 25, 30 and 35. This is called a “sprinkle provision” as it “sprinkles” the principal over a period of years rather than delivering a lump sum at one age.
Alternatively, parents may also consider a Living Trust with provisions for minor children similar to those described in the Testamentary Trust. A Living Trust is a contract that the married couple creates during their lifetime to hold their asset. They are the trustees over the trust and have full control and authority over their assets. They can name the successor Trustees who will take over once both of them are gone. Having a living trust will avoid having to go to court to probate the estate and it could save much time and money for the estate so that the assets are preserved for the minor children.
Another advantage of having a Living Trust is where the family may have a special needs child. Planning when there is a special needs child is very important so that, if something happens to one or both parents, a special needs trust is in place to help make sure the child does not lose any benefits to which he or she may be entitled.