Summer is my favorite time of year. I don’t like seeing all those back-to-school ads starting up in August.
But I realize that’s probably because I don’t have kids, and my dogs don’t go back to school (having flunked training 101, we don’t bother. They’re beagles.).
I understand that parents of school-age children can be very happy about “back to school” time. Parents of college-aged students may be less excited, even sad, as their now grown kids head out.
Either way, sorry parents, I’ve got a little homework for you first.
Minor children
If you’ve got minor children, now is a good time to look at whether you’ve got all the necessary legal documents in place for that dreaded “in case something should happen to you.” Those documents are:
Nomination of guardian
You should have a will or, even better, a trust naming a guardian for your minor children should you pass away.
If there is a surviving parent, there will not be a need for a guardianship unless that parent previously lost custodial rights.
But if both parents are deceased or otherwise unable to care for the child, a nomination of guardian becomes extremely important, especially during the time between a parent’s death and the court appointment of a guardian.
If you only have a will (i.e., no trust) naming a guardian, you will also need an appointment of guardian document naming a guardian for your minor children in the event of your incapacity. This document should be separate from your will, as your will is only effective at your death.
Health care directive for minors
As the parent, you’ve been making health care decisions for your minor child all along. You make appointments, have discussions with health care providers, decide on vaccines, and approve (or disapprove) medical procedures.
But what if you weren’t able to? If you’re incapacitated, whether temporarily or permanently, someone else will need to be the health care agent for your children.
You can name that person — or better yet persons — in a health care directive for minor children. It helps to also list the names and contact information for their health care providers.
Living trust
Having minor children is one of the primary reasons for putting a living trust in place.
Should you pass away, a trust can spell out who manages your assets for your children, how money is to be spent, and when the assets should be distributed to your children.
Without a trust, if there is no surviving spouse (e.g., your spouse is also deceased, or you are not married) your child inherits everything at age 18.
In most cases, and especially when a child has lost a parent at a young age, that’s much too young to be suddenly handling larger sums of money than they’ve ever managed before.
A trust can appoint a trustee to manage your assets until your child reaches certain ages or milestones. For example, the trust can provide that the trustee can distribute to the child for “health, education, maintenance, and support” until certain a certain age.
The trust can further define those terms (does trade school count? Community college? Travel to visit relatives? Any gifts at graduation?).
A typical provision is that once the child reaches age 25 or graduates from college, one-third of the trust is distributed to them. At age 30, half of what remains is distributed, and finally, at age 35, it’s all distributed, and the trust terminates.
Of course, the ages and percentages can vary.
And in some circumstances (significant wealth, a child’s incapacity or inability to handle assets, asset protection, maintaining the trust assets as separate property, for a few examples), it may make sense to continue the trust indefinitely.
Perhaps you allow the child to become a co-trustee at age 30 and sole trustee at age 35. The point is, you can customize your trust to care for your children as you see fit, without the law requiring a distribution at any particular time.
Young adult children
If you’ve got adult children, all of the above applies with respect to having a living trust in place. But now they’ve got a little homework that you’ll likely need to help them with.
Durable power of attorney: I’ve repeated this many times in this column. It’s one of those things that rarely gets considered until it’s needed, and then it may be too late.
Any adult age 18 and older should have a durable power of attorney in place.
You can’t make decisions, access information, handle bank accounts, or otherwise manage your adult child’s affairs if they become incapacitated and do not have a power of attorney in place.
Incapacity of a young person often happens because of an accident — and you don’t get advance warning of accidents. That’s why it’s important to have that document in place as soon as a child turns eighteen. And then let’s hope you never need it.
Health care directive: For the same reason that all adults need a power of attorney, they all need a health care directive as well.
If your child goes off to college and is hospitalized for any reason, you won’t have access to medical records, health care providers will not be able to provide you with information, and, as happened to a client of mine once, you may not even be able to verify your child was admitted to the hospital, without a health care directive and HIPAA form authorizing you to obtain information and make decisions. It’s a standard form, and you can probably get it from your doctor’s office. You and your adult children should get that completed asap.
Consider this another “back to school” reminder. Set a good example for your kids by doing your homework. You’ll be glad you did.
Teresa J. Rhyne is an attorney practicing in estate planning and trust administration in Riverside and Paso Robles, CA. She is also the #1 New York Times bestselling author of “The Dog Lived (and So Will I)” and “Poppy in The Wild.” You can reach her at Teresa@trlawgroup.net
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