Estate Planning Concerns Involving Children

Children are especially vulnerable in the event of death or incapacity of a parent. Prudent estate planning demands that their interests be specifically and thoroughly addressed in creating a will, power of attorney or trust.

Jennifer C. Rydberg is a Kent, Washington, estate planning lawyer serving the Seattle and King County area since 1978. She invites clients to schedule a consultation at 425-235-5535 to discuss their wishes regarding minor children.

Common Issues that Arise

Because minor children do not have independent legal standing until age 18, the impact on them must be considered in all aspects of estate planning. Young adult heirs over 18 are particularly financially vulnerable and should be protected by your estate plan.

Guardianship — To help avoid costly and possibly traumatic custody proceedings in the event of your death, your will should designate a legal guardian for minor children. It could be the same person for all your kids or a different guardian for each individual child. You may choose to have your child cared for and their money managed by the same person or by different people. Ms. Rydberg advises clients on choosing an appropriate person.

Nonparental custody — If your child is orphaned, do you want to allow for third-party custody and/or adoption by a grandparent, stepparent or other relative?

Wills, trusts and powers of attorney — If minor or young adult children are designated as beneficiaries in your will, how will they inherit? Revocable living trusts avoid probate under Washington law; however, testamentary trusts do not. International assets require special planning. Ms. Rydberg can draft your will and trust provisions stipulating how assets can be used (e.g., education, welfare, support or health care) and at what age the child will be able to access the funds. Powers of attorney documents should specify who will make educational, health care and other important decisions regarding your children if you are unable to do so. Powers of attorney are not in the will, and the authority granted by a power of attorney stops upon death.

College savings plans — Ms. Rydberg is knowledgeable about different methods for funding college education and will work with you and your financial adviser to help you plan funding for your children's education after high school. The following methods avoid federal, state and local taxes:

A 529 college savings plan (named after Internal Revenue Code 529) allows tax-free growth of contributions set aside for college expenses. A parent or grandparent maintains control of the plan, but its assets can be used only for higher education for the beneficiary child. The investment works similarly to a 401(k) or IRA.

    • Running Start, Advanced Placement (AP) classes, International Baccalaureate high schools and high school-college partnerships can also help your children acquire the education they need to be financially successful and independent.

    Parent Plus and student loans. Student loans are modern indentured servitude. These loans can become huge burdens for you and your children in ways you cannot imagine. It is possible for most children who want a college education or to acquire a trade or specialized skill to accomplish this without borrowing money. Planning, creativity, thinking outside the box and a willingness to go about getting a formal education a little differently can avoid crippling debt and launch your child to financial independence. AVOID student loans as much as possible.

    A 529 prepaid tuition plan, also called a GET (Guaranteed Educational Tuition) plan, allows parents (or grandparents or any contributor) to prepurchase tuition credits at current rates, locking in a college education at today's price. The plan is guaranteed — paying for half a year's worth of tuition now would cover a half-year's tuition at a state college 10 or even 20 years in the future. GET credits can be used at public and private colleges and universities inside and outside the state of Washington.

    Grants and scholarships