There is no accounting for the many curveballs life can throw your family’s way. One day, you are the happy parent to a child who is full of laughter and sunshine. Next, you may be forced to face up to the possibility that you have to leave your child alone in the world due to an injury or illness that will claim you before your child becomes an adult.
It is an obviously unpleasant situation, yet it is one that affects around six million American children annually, all of whom lose a parent or sibling before they turn 18. We hope, as you hope, that your child will never face that devastating situation. But if the worst happens, you need an estate plan designed to ensure your child receives the care they need as they grow without you and, as importantly, benefit from the full inheritance you leave behind.
The One Route You Absolutely Must Avoid – Guardianship Through Probate
Under Section 2111.12 of the Ohio Revised Code, the courts will provide a guardian for any minor under the age of 18 if it deems that minor’s situation suitable for guardianship. The obvious scenario is the loss of both parents which leaves the child without somebody to handle their care, legal, and health requirements. But the courts may also appoint a guardian if you are deemed unfit to parent, such as if you are declared “incompetent” for the state. Then, there is the untimely death scenario where you pass away before assigning a guardian to handle how your estate is passed down to your child.
You cannot allow this to happen because this court-appointed method leads to guardianship through probate.
Your child becomes a “ward” through this process, with the guardian taking responsibility for handling their person and, in cases where estates are involved, their property.
We will focus on the estate planning side of things.
Your child will receive a court-appointed guardianship of the estate when they have obtained property worth $25,000 or more. At that point, the state deems financial administration necessary, requiring an adult to handle the legal aspects of this property ownership on your child’s behalf. If you have not appointed a guardian to handle all of this, the court does it for you. You lose any control you had over how your estate is settled on your child’s behalf if you have not made allowances for your possible passing.
Why You Have to Avoid This Route
Allowing the courts to appoint a guardian to your child in your stead can lead to major problems. That guardian acts on the court’s behalf. Ostensibly, the Probate Court itself becomes your child’s guardian, with the person assigned to the estate guardianship being obligated to handle the estate you leave behind based on the court’s decisions.
A loss of control is the obvious result here. Not only does the estate you leave your child have to go through the probate process, creating costs that result in your child losing a large portion of their inheritance, but you leave yourself with no control over the care your child receives in your absence.
For example, we will assume you pass away without leaving a Will. The Probate Court handles the appointment of guardianship because you have no legal documents specifying a guardian you wish to have appointed. That guardian then handles the distribution of the assets you leave behind according to the Probate Court’s rules rather than any stipulations you would have made in a Will or trust. Your child may receive less, all while under the care of somebody you might not even know.
There is another problem.
Guardianship through probate gives somebody you may not even know almost total control over how to distribute the assets you leave behind. Conflicts can occur because of this. Your beneficiaries – i.e. your child or children – may not receive the assets you wish per the intentions of any estate plan you have created. There are also issues related to the timing and manner of asset distribution to consider, with the guardian having control over both. You would like to believe the courts would appoint a guardian who will follow the rules, which is what should happen. However, because you are no longer around to oversee the process, your child’s court-appointed guardian may not live up to the expectations you would have for a primary caregiver.
What You Should Do Instead
Proper estate planning is your route out of the guardianship through probate situation. Your goal is to take Ohio’s Probate Courts out of the equation as much as possible while you retain control over what happens to your child if you pass away and can no longer care for them. That control is ultimately beneficial to your child, and you can access it in two ways.
Method 1 – Appoint Your Own Guardian
Getting ahead of the situation is always more effective than waiting until the situation arises where your child may require guardianship. Your Will comes to the fore here. You can use this legal document to designate a guardian of your choosing for your child if you pass away before they reach adulthood.
So, you get control. But you also get many of the problems inherent to allowing guardianship through probate. Your estate still goes through the probate process upon your passing, with your Will simply serving as a document that details what you want to happen to your assets and who should serve as guardian to your child. Any debts you leave behind are paid via that estate, with any fees payable for the administration of your Will also coming out of the estate.
The result is you may leave less of your estate to your child than you intend.
On the guardianship front, you also have to choose somebody you know you can trust to act in accordance with both your wishes and your child’s best interests. That is not always an easy person to find. You also have to account for guardianship termination rules when using this method. The guardianship you set via your will terminates when your child turns 18. The state may also terminate the guardianship if it finds that your appointed guardian is failing to promote your child’s best interests. You may also not even need to assign a guardian to your child if your estate is valued at less than $25,000, though that is unlikely considering you will probably leave property and money behind.
As a final note for this method, Ohio also allows minors over the age of 14 to elect their own guardian if one is not elected for them. That minor-elected guardian still carries out the duties expected of somebody in that position, but it may be worth having a conversation with your child if they are between 15 and 18 years of age to align your Will with their guardianship wishes.
Method 2 – Create a Trust to Ensure Your Assets Are Passed on as You Intend
The second, and more attractive, method is to take guardianship through probate as it relates to your estate out of the question entirely. For that, you will need to create a trust vehicle you use to determine when and how your child receives the assets you leave behind.
Trusts are invaluable on the basic level because a child under the age of 18 cannot inherit from your estate. You essentially use the trust to protect the assets due to your child until they come of age. With a “living trust,” you set your child up to avoid the costly probate proceedings a guardian would normally oversee, ensuring they receive the vast majority of your estate as you see fit. Speed of transfer is also another major benefit of the trust route. The probate process often takes several months, leaving both your child and their guardian waiting for receipt of the assets due to them. The right trust allows the trustee you assign to begin the distribution of assets you place into the trust from the moment of your passing without the Probate Court’s involvement.
So, think of a trust as a protective mechanism.
But there is a catch to consider here.
Living trusts come in both revocable and irrevocable formats. With the former, you maintain control over your estate, including keeping the power to pull assets back, at any time. The problem is that living trusts are still inventoried and appraised for estate tax purposes, meaning you cannot rely on them to protect your assets against tax or debts.
An irrevocable living trust essentially transfers the ownership of the assets you wish to leave behind to your child. You have no control and can exercise no control in the future, but your beneficiary – i.e., your child – avoids dealing with estate tax issues related to the assets entered into the trust.
Create Your Estate Plan for the Care of Minor Children and Dependents
If there is one message we want you to take away from all of this, it is that you should never leave it up to the courts to deal with your estate after you pass away. That is particularly the case if you leave behind minors or dependents to whom you intend to leave assets. You need an estate plan. One that covers the guardianship aspect in case the worst happens while ensuring your child receives as much of what they are due as possible.
The problem is that creating this plan is often complex and requires you to remove emotion from the equation to make the right decisions. Trust Chris Diedling Law to guide you through your entire estate planning process, from Will creation to trust formation. Complete our confidential planning intake form today – a few minutes of your time sets you on the path to planning properly for the care of minors and dependents.