February 22, 2019
Naming guardians for minors and young children is a major priority for Wisconsin parents working to create an estate plan. For any parent of minors or young children, a holistic estate plan must detail your wishes to ensure your children are cared for as you hope.
In this article we will focus on the importance of your estate plan correctly naming guardians for minors and young children. In a future article, we will discuss the importance of creating a trust for minor and younger children.
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Arrangement for Care and Naming a Guardian
If a child has a surviving parent, the surviving parent is the natural guardian who will normally take over the duties of care and finances for your minor children.
In a divorce or never-married single parent situation, the surviving parent will normally continue as the natural guardian.
However, even if the surviving parent is the natural guardian, a judge may need to appoint a guardian of the estate for certain inheritances or for certain property to be received or for the sale of real estate.
Where the surviving parent’s parental rights were terminated or if the surviving parent is deemed unfit to handle a minor child’s care, custody or finances, a court may appoint someone other than the surviving parent as guardian.
If both parents are deceased, a court will need to appoint a guardian for the care of any minor children and to handle the minor child’s finances.
Don’t Leave the Choice of Who Will Care for Your Children to a Judge
As noted above, a judge will appoint a person or agency to care for any minor orphaned children if a suitable parent is not available. Rather than leave this fundamental decision solely to the judge, our estate planning attorneys recommend planning ahead. We advise our Wisconsin clients to name who they want to be the minor children’s guardians of the estate and person.
Wisconsin Law Allows You to Nominate Who Should Raise Your Children
As a parent, Wisconsin Stats Section 54.15(6) allows you to nominate who you want to take over for your parental duties, as guardian, in a Last Will and Testament:
Wis. Stats. 54.15(6) Testamentary nomination by proposed ward’s parents. Subject to the rights of a surviving parent, a parent may by will nominate a guardian and successor guardian of the person or estate for any of his or her minor children who is in need of guardianship, unless the court finds that appointment of the guardian or successor guardian is not in the minor’s best interests. For an individual who is aged 18 or older and is found to be in need of guardianship by reason of a developmental disability or serious and persistent mental illness, a parent may by will nominate a testamentary guardian. The parent may waive the requirement of a bond for such an estate that is derived through a will.
Generally, the court will appoint whomever you nominated in your Last Will and Testament as guardian, unless the person is deemed unsuitable and therefore not in the child’s best interest.
It is important to note that nominating someone in your will is not a guarantee that the judge will appoint your first choice. Yet, normally the judge will follow your wishes unless there is significant evidence that this is not in your child’s best interest.
Wisconsin Estate Planning and Guardian of the Estate and Person
As Wisconsin estate planning attorneys, we know from first-hand experience the importance of naming a guardian to help care for and raise your children if you are unable.
There are two types of guardians that need to be considered and nominated in your Last Will and Testament:
- A guardian of the estate – who is charged with administering the estate that the minor inherited from a deceased parent or others; and
- A guardian of the person – who is charged with looking out for the well-being and best interests of the minor or young child.
Your preferred guardian can be nominated as both the guardian of the person and as guardian of the estate. Yet, you can name one person to serve as guardian of the person and another to serve as guardian of the estate.
This selection process raises the question of who would be best to fulfill these different guardianship positions. To explore this question, let’s define what the different positions entail.
Guardian of the Estate vs. Guardian of the Person
Where the minor is to receive certain assets such as being named as a beneficiary on a life insurance policy or IRA, the holder of the life insurance policy or IRA may require the parent to be appointed as a guardian of the estate in order for the minor to receive the funds. Where property needs to be sold or if the surviving parent is not fit to be a guardian, the court may need to appoint a guardian of the estate who is not the surviving parent.
A guardian of the person is normally not required when there is a surviving parent. However, if the surviving parent is not fit or if the minor child will not be living with the parent (e.g., attending school and living in a different state), the court may appoint a guardian of the person. For example, a school district may ask that a local person be appointed as guardian if the surviving parent is absent from the area or unfit to act or unavailable to act.
In any event, even when both parents are capable, fit to act, and living, it is best to plan for the appointment of the guardian of a person and estate for any minor children in case something does happen to both parents.
Duties of a Wisconsin Guardian of the Estate
The guardian of a minors estate is appointed by the court to handle financial matters that a child may have to deal with in addition to any property or inheritance that the child receives. An exhaustive list of the type of items that a guardian of the estate may handle with or without court approval is set forth in Wis. Stats. 54.19 and 54.20.
In short, the guardian of the estate will be in charge of the minors’ assets. This includes paying bills and investing assets for the minor. The guardian of the estate oversees any property rights and collect assets such as assets from a probate, life insurance or IRA that names a minor child as a beneficiary. The guardian is also responsible for selling property, and overseeing the minor child’s bank accounts and employment income.
Therefore, it is important that the guardian of the estate be well versed in finances and be very trustworthy. Normally, a family member, such as a parent or sibling of a deceased parent is nominated and appointed. However, you can nominate a family friend or another trusted individual. For those with no one to nominate, there are agencies, referred to as corporate guardians or corporate trust departments, which can be be appointed.
Duties of a Wisconsin Guardian of the Person
The Wisconsin guardian of the person will oversee the minor’s school, religious, health care, and other personal non-financial decisions regarding the welfare of the minor. This includes determining where the minor will live. It is imperative to nominate a guardian of the person who shares your values, religious values, and life priorities. Ideally, your preferred guardian of the person will already know your child.
It is also very common that your minor child will live with the guardian of the person. The guardian of the person will make child rearing decisions in your place. Great thought must be given to the person or agency that will be appointed.
Trusts: A Must for a Wisconsin Estate Plan for a Minor or Young Child
Although Wisconsin law allows a court to restrict direct access to guardianship funds until the age of 21 by way of a trust, a court will rarely agree to hold back a child’s guardianship funds beyond the age of 18. Therefore, we advise against leaving an inheritance or naming a child directly as beneficiary on a will, trust, life insurance, IRA, POD account or TOD account, as the child will be in full control of these funds upon turning 18.
Instead, we suggest placing these assets into a trust for the benefit of a young child. Funding into a trust allows you to appoint a trustee to oversee your child’s funds and to make distributions to your child as you would have wanted. In addition, it does not have to terminate at the age of 18. It can be set to terminate at an older age or on a different event such as completing college. Finally, if the surviving parent is not someone that you want to handle your child’s inheritance from you, then a trust is crucial, especially if the surviving parent is likely to handle your minor child’s finances. (We will discuss trusts for minors and young children in a future article.)
Other Considerations Related to Guardianship for Minors
There are too many issues to cover in this article, but here are key considerations that must be considered when choosing a guardian:
- Parents need to consider alternative guardians. If your first choice is unable or unwilling to act, having a backup alternative guardian is important.
- Plan for preferred guardians to be unavailable in the future.If your agreed guardian becomes ill or unfit after you pass, establishing a plan for that possibility ensures a smoother transition. For example, would the guardian’s spouse take over or would the guardianship appointment skip to another family member?
- Consider naming an agency as a guardian for minors and young children. While there are advantages to having a family member or friend appointed as guardian, there are risks too. Will your chosen person be too busy or will they have difficulty saying no to your child? Fraudulent use of assets by a guardian happens most often when a family member has been appointed guardian of a minor or young child. Naming an agency as guardian can mitigate some of these risks.
- Considering naming separate guardian of the estate and guardian of the person. Splitting the duties of the person and estate among different persons or corporate guardians will provide some oversight and allow you to appoint the right people or corporation for the right tasks. Is one family member trust worthy with money and good with finances, while another is perfect for life decisions and raising your child?
- Consider the special needs of the minor. If you have a child who may require a guardian as an adult due to the child’s disability or mental illness, nominating a guardian in your Last Will and Testament is advisable even if your child has reached the age of 18.
We’re Here to Help with Naming Guardians for Minors and Young Children
Naming guardians for minors and young children must be addressed as part of any good estate planning process. Our estate planning team is ready and able to help you and your family make the right decisions for you. Contact us today to start working on a well-round and thorough estate plan.