Adopting a child? Don’t forget to update your Will and estate plan!

The adoption of a child is an event filled with expectation, planning, longing, and finally, the excitement of completing the court proceeding that legalizes the adoption. So many things start to happen that it’s easy to lose sight of the need to protect the child in case of a tragedy. The way to do that is by preparing a Last Will and Testament that includes provisions for a Guardian as well as provisions to protect the assets for the child’s benefit up to a certain age determined by the parent. Beneficiary designations of tax-deferred assets, retirement plans, annuities and life insurance should be coordinated with the estate plan. Whether the assets are large or small, the process is called “estate planning.” As I like to say, careful planning can prevent a crisis, and failure to plan can create mountains of legal work.

If a minor is orphaned, an adult will have to be appointed as their legal guardian until age 18. The parent can include a provision in the Will that specifies a string of successor guardians. See NJSA 3B:12-13 -18. If the child is adopted by a married couple, the surviving parent is the natural guardian. But if there is no surviving parent (see NJSA 3B:12-21), there will be a void and there may be a battle among the grandparents or a battle among friends or remote kin. Even after the Court has appointed the testamentary guardian, the court has the ongoing authority to look into the best interests of the minor if something goes awry and a person brings the matter before the court.

The parent also needs to consider who will manage the child’s funds if the parents have died. Unless a trust is written into the estate plan, the property of the minor in excess of $5,000 in any given year will have to be deposited into the County Surrogate’s account. The minor’s guardian will obtain the funds by completing request forms at the Surrogate’s office, and when the minor reaches 18, s/he can waltz in there and receive the entire amount. As you can imagine, this may not be a good idea, depending on the circumstances, and particularly if there are substantial sums there. The intestacy law (for estates where there was no Will) does not automatically create a trust for the minor just because it seems like the smarter thing to do. The guardian has to bring an action for a protective arrangement (see NJSA 3B:12-1) and to create a trust for the minor (see NJSA 3B:12-54) to preserve the funds for the child’s future, past age 18.

By writing a trust into the Will, the parent can select the trustees — who may be different than the people they select as the guardians — and can decide the ages at which their child will receive funds from the Trust. They can designate the Trust to receive life insurance, annuity payments and the funds from an IRA or 401K. And of course, if the child has special needs and will require SSI or Medicaid or DDD over time, the parent would want to build that into the estate plan as well.

I have had several occasions over the years to represent clients who needed to become guardian of a minor because the parent(s) died with no estate plan. Eventually the problems were solved, but a tremendous amount of legal work was required, and acrimony among family members was the inevitable result of the parents’ failure to plan.

Call us for legal strategies and representation concerning guardianship, trusts and estates … 732-382-6070

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