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Parenting requires a lot of expenses—diapers, daycare, and maybe even a minivan. Do you really need an estate plan on top of everything else in order to take care of your kids? The best way to answer that question may be by asking what happens if you don’t have one.
In Minnesota, minor children can’t receive inheritance directly. If you don’t name a trustee in your estate plan to manage your children’s finances in the event something happens to you, a relative, family friend, or other “interested person” will need to go to court and ask a judge for permission to manage life insurance proceeds or any other money designated for your children in your estate. This is a function of the Minnesota Uniform Transfers to Minors Act. By naming a trustee in your estate plan, you get to determine exactly who will be responsible for your children’s finances rather than leaving it up to a judge to decide. You can also name an alternate trustee so that if your first choice is not available to help, there’s a backup plan in place.
The process is slightly different for determining child custody. Unlike with financial trustees, an estate plan can’t create an automatic transfer of child custody in the event a parent dies—only a judge can approve a custody transfer from a parent to a third person. Judges in Minnesota make determinations about child custody based on the children’s “best interests.” This means that a parent’s expressed preference for a custodian will be just one of several factors that the judge will consider in making their decision about who a child should live with. An expressed parental preference for a successor custodian, however, is very strong evidence that the proposed transfer is in the child’s best interests. Parents know what is best for their children and the court system in Minnesota has a long history of recognizing parents’ preferences for a successor custodian unless there’s a strong reason to disregard their wishes. By naming a custodian in your estate plan, you give the court the evidence it needs to recognize your preferences.
If you don’t create an estate plan for your children, your life insurance proceeds won’t disappear and your kids won’t be sent to live with strangers. State law has created ways to transfer your parental authority to your friends and family in the event you’re no longer available for your children, even if you never lift a finger. But by creating an estate plan, you get to name the specific people that you trust to take care of your children and that creates peace of mind, something that’s in short supply when you’re a parent.