If something happened to you and you were unable to care for your minor children, what would take place? If you became incapacitated or died, who would take care of the kids, where would they live and who would make medical and other decisions for them? What would happen to all your property and other assets you left for your children and who would handle it all?
In these situations, to take care of your children, unless you did some prior planning, someone would have to petition the probate court for appointment of a guardian. After the petition for guardianship has been filed, the court schedules a hearing. Prior to the hearing, the petition and notice of hearing must be served upon all interested parties.
There are lots of people that can be interested parties. Interested parties include each person who has had principal care and custody of your minor children during the sixty-three days preceding the filing of the petition; the nominated guardian; your minor children if they are fourteen or older; and both you and the other parent of your minor children; or if neither of you are living, the grandparents and the adult presumptive heirs of your minor children.
The court may appoint an investigator called a guardian ad litem to meet with your children and the proposed guardian and provide a report and recommendation to the court. At the hearing on the petition for guardianship, the court reviews the report of the guardian ad litem and hears testimony from your children and other interested parties. The court considers a number of factors, weighs them, evaluates them and makes a determination of what is in the best interests of your children.
Some of the factors the court considers include the permanence of the proposed custodial home, the moral fitness and mental and physical health of the proposed guardian and the ability of the proposed guardian to provide food, clothing, medical care and other material needs. The probate court then appoints a guardian. After the guardian is appointed, he or she then must report to the probate court on the status of the guardianship at least once each year.
If no one wants to be guardian for your children and they are orphaned, Children’s Protective Services may step in and take custody of your children. Your children then become wards of the state and part of the foster care system. Your children may be split up and/or put up for adoption. Is this what you would want for your children?
There is a way to avoid both the long tedious court appointed guardianship process and Children’s Protective Services. You can have your estate planning attorney prepare a parental appointment of a guardian for your children, which you sign. In this document you designate the person or persons whom you want to be guardian of your children in the event of your incapacity or death.
In that circumstance, all your appointee would need to do is present the guardian appointment document to the probate court, along with an acceptance of guardianship and the court would then issue letters of guardianship. No muss, no fuss. The person you want is then the guardian of your babies. The only people that need to be notified of this guardianship are the children and the person(s) in care of your children or the children’s nearest adult relative.
In the case of either a court or parental appointment of guardian, if your child is older than fourteen and does not get along with his or her guardian, your child can file a written objection with the court. The court may then schedule a hearing to determine if the continued appointment is in the best interests of your minor child.
In situations when you are not incapacitated but will be unable to care for your children for less than six months, such as going away on a business trip or your child is going on vacation with his or her friend’s family, you also have non-court options. You can have your estate planning attorney prepare a power of attorney to delegate your parental authority to another for that time period someone else would be caring for your children.
The designated person would have all of your powers as a parent for that period of time without the need of any court appointment or filing. If you are serving in the armed forces and deployed to a foreign country, the six months can be extended to a period up to thirty-one days after the end of your deployment.
To take care of all your property and other assets, unless you have done prior planning, someone would need to petition the probate court for appointment of a conservator. If you are still living but mentally incapacitated, the conservatorship would be for you. After your death, there would be a separate conservatorship proceeding for the share of each of your children.
A conservatorship proceeding in probate court is similar to a guardianship proceeding, but it is separate and distinct. When the court appoints a conservator, the conservator’s duties are to preserve, protect and manage the assets of the protected person, either you or your minor child. The assets are used by the conservator to pay the bills of the protected person. Just like with a guardian, the conservator must file annual reports with the probate court.
The conservatorship continues for you for the rest of your life. The conservatorship for each minor child continues until such child reaches the age of 18. At age 18, your child miraculously gains all the wisdom and insight of adulthood. The law says that your child is now is an adult and your child is entitled to have his or her entire inheritance being held in the conservatorship. Oftentimes, when a young adult receives a large sum of money at age 18, he ends up going to college, the University of Corvette.
You can avoid the probate court conservatorships for you and your minor children and still provide for all of you by setting up a trust with the proper instructions. You would include provisions in your trust to provide for you and your dependent children during your lifetime, and then provide for your children when you are gone.
After your death, you can prevent outright distributions to your children at age 18, by leaving direction in your trust to set up lifetime trusts for each of your children. With lifetime trusts, the assets are placed in trust to provide for each child for his or her lifetime.
For younger beneficiaries, you could appoint a third party trustee who would manage your trust assets until such time that the child is able to handle his or her own financial affairs. After a certain age, a child could be named a trustee of his or her separate lifetime trust with someone he or she chooses.
When younger children, you can leave instructions to hold off on setting up the separate trusts for each child. Your instructions could be to place all of your assets in a common trust for the benefit of all your children until the youngest one reaches a certain age, such as 25, or receives a college degree. Until that time, the trust would pay the expenses of any of your children as the need arises, similar to how you as a parent would do if you were there.
The common trust prevents inequities among the children if at the time of your death, one or more of the kids has completed college and others have not. With a common trust, the college costs for the younger children would be coming out of the family bucket, instead of coming out of the younger child’s separate trust bucket. Once the youngest child reaches the designated age or receives a college degree, then the trustee would set up the separate trust shares for each of the children.
By planning ahead, you can make sure that your babies are protected in the event of your absence. With the proper documents in place, you can also make life much easier for your nominated guardians and trustees. They can be concerned with caring for your children what you have left to provide for them, instead of worrying about a court hearings or court ordered visitation.
By: Matthew M. Wallace, CPA, JD
Published edited August 24, 2014 in The Times Herald newspaper, Port Huron, Michigan as: Taking steps to protect your children