Got Kids? Planning for Your Children’s Future

Got Kids? Planning for Your Children’s Future

By Estate Planning Practice Group

In their estate plan, parents should ensure their children are provided for in a way that best fits their family’s needs, goals and expectations. This article explains some common planning issues and techniques that parents should consider when implementing an estate plan.


If you have children under the age of 18 you should have a will that names a guardian for them. If you do not name a guardian in your will, it will be left to the court to decide who to appoint as the guardian of your children after your death. The guardian is responsible for caring for your children.

Here are a few tips to consider when deciding who to name as guardian:

  • If you are naming a couple, consider who you would want to care for your children in the event that one of the spouses dies or becomes in-capacitated, or if they divorce.
  • Consider naming several backup guardians in the event your first choice is unable to be the guardian.
  • If there is someone you specifically do not want to be the guardian, consider expressing that instruction in your will, or in a private affidavit retained in your records and with your attorney.


It is also important to consider who should take care of the money that you leave for your children. This person is known as a conservator. Like the guardian, you can appoint an individual of your choosing to be responsible for the financial aspect of your children’s care. Also like a guardian, if you do not appoint such a person, the court will appoint a conservator after your death.

The guardian and the conservator can, and often should be, two different people. Naming two different people as the conservator and guardian creates checks and balances between the two roles. The guardian requests money and the conservator distributes the money to the guardian for your children’s health, education, maintenance and support.

Alternatively, instead of naming a conservator in your will, you can set up a living trust, and appoint a trustee for that trust. A trustee’s duties are the same as that of a conservator. Setting up a trust for your children with a trustee has several benefits. First, you can control the manner, timing and guidelines for distributions to your children. Second, if you set up a living trust, the trustee’s appointment is private, so that the court does not get involved. Third, after you die, the money is available almost immediately for your children’s needs. This avoids having to go through the probate process in court, which can take up to a year or more. Finally, although an accounting is due to beneficiaries, the trustee is not required to provide the court with annual accountings as a conservator would.


If you have children from a previous marriage, tricky questions arise as to what portions your children and your new spouse will receive from your estate or trust. If you would like to give assets to your new spouse for life, but also ensure your children receive the remainder of your estate after your spouse dies, you can set up a spousal trust. If you use a spousal trust, you control the amount and frequency of the distributions to your spouse, and your children ultimately receive the remaining trust assets at the spouse’s death. Finally by setting up a spousal trust, you may be able to take advantage of substantial estate tax savings if your estate exceeds $1 million in Oregon and pass more to your children free of inheritance taxes at your spouse’s death.

Another option is to give your children or your current spouse one large asset. For example, you could name your children as the beneficiaries of your life insurance. This is a simple and efficient way to carve off a portion of your estate for your spouse or children if the circumstances are appropriate.


Don’t forget that Oregon law automatically revokes your will if you get married after you execute your will. Even if you have a living trust as your primary dispositive estate planning document, your will is the only document in which you can name guardians for your children. Make sure to execute a new will after you get married.


If a parent pays for education costs for one child, it is likely the parent would also like to do the same for the remaining children. A Common Trust is a “family pot” of money that is used if the parents die while their children are under a specified age, such as 22. One advantage to setting up one big pot for all the children is that it puts the younger children on the same playing field as the older. Once the youngest child reaches the specified age (and has received similar benefits as older siblings), the assets are then divided equally among all children.


Parents can set up a separate trust for a child who needs to cultivate money management skills. (Amazingly, some 18 year olds would not tuck their inheritance away for a rainy day.) A child’s separate trust can be a lifetime trust or can terminate at a stated age.

A lifetime trust has several added advantages. First, you control the distributions and dictate trust guidelines regarding appropriate distributions. For example, parents may state that a child can only have trust distributions if that child is employed, a student or otherwise engaged as a productive member of society. Also, tax planning within a child’s trust may keep all or a portion of a child’s separate trust exempt from estate taxes for your child’s life and perhaps even your grandchild’s life.


A Beneficiary Controlled Trust has all of the advantages of a lifetime trust as discussed above. In addition, this type of trust can be structured in such a way as to protect your child’s assets from potential creditors. An independent trustee manages the trust assets until your child reaches a specified age, then the child becomes his or her own trustee. Additionally, a special independent trustee is appointed under the terms of the trust. This trustee would continue to act as trustee even after the child reaches the age where he or she has become a trustee The independent trustee’s sole responsibility is to determine when to make distributions from the trust.

By structuring the trust in this manner, creditors cannot reach the assets of the child’s trust because the child cannot demand distributions from the trust. The Beneficiary Controlled Trust also works to protect your child’s inheritance from the creditors of the child’s spouse. It also protects the child’s inheritance from the spouse in the event of divorce.

While the above situations frequently arise, it is important to note that each family is unique and has special situations which should be considered when drafting an estate plan. If you have any questions about the information contained in this article, or about creating an estate plan, please call a member of the firm’s Estate Planning Practice Group.