Parents of minor children should consider numerous factors when their Will is concerned. With some proper planning, the detrimental effects of the loss of a parent can be minimised, as much as is possible in such a tragic scenario.
Wills often appoint ‘testamentary guardians’. This is a person or persons who are nominated in your Will and charged with the task of taking custody of your minor children, generally in the event of the death of both natural parents.
It is important to note that the person nominated is not automatically appointed as the minor child’s guardian. Instead, that person would need to make an application through the Courts to be legally appointed as the child’s guardian. A copy of the Will can be provided to the Court in support of the application, and would be highly persuasive evidence in favour of the applicant. Due to this proactive step, it is important to discuss the proposal with the person to be nominated to ensure they are willing to take on the responsibility and are aware of the legal steps required.
The views of a mature child (being a child of around 15 years of age) are also highly persuasive to the Court. Therefore, if the child has sufficient maturity, the discussions surrounding the guardian should also involve the child. A unified plan from all parties (i.e. parents, guardian and child) is most likely to be approved by the Court.
Another consideration for parents is the choice of executor. The executor is the person nominated to carry out the provisions of the Will. As children are unable to legally receive an inheritance until they attain the age of 18 years, it is often necessary for the executor to hold the inheritance upon trust for the children until they attain that age (or a higher age such as 21 or 25 if that is specified in the Will). The executor should therefore be trustworthy and capable of money management.
Wills often include a clause which allows the executor to advance monies to benefit the children despite the fact they have not attained the requisite age. While the child is a minor, the payments under such a provision would be made to the guardian of the child.
Parents should consider whether it is appropriate for the executor and guardian to be the same person. If so, that person would have complete control of the money and could advance monies to themselves for the care of the child. Conversely, separate persons for each role would ensure a ‘checks and balances’ system where the spending of money is managed by the executor who is independent from providing care for the child.
Directions can be given to the executor regarding what type of spending should be permitted. Spending on education or medical expenses are generally uncontroversial. However, it may be beneficial to indicate preferences on the type of schooling (private vs public), whether funds should be released for living expenses and holidays, and whether the child is to receive an allowance. These types of directions can be outlined either in the Will, in an executor’s memorandum, or simply through discussion.
If the value of the estate is substantial, parents should also consider executing a testamentary trust Will. This type of Will allows the income of the estate to be distributed to the minor children at full adult tax rates (first $18,200 tax free) instead of the usual trust rates for minor children (first $416 tax free). There are additional costs associated with establishing and maintaining a testamentary trust Will so it is important that the estate is sufficiently large to cover these costs.
Every family is different, but the above issues should be carefully considered by all parents when completing their Will.
With multiple accredited specialists in Wills and Estates and offices in Geelong, Corio, Ocean Grove and Winchelsea, the team at Wightons Lawyers are uniquely stationed to provide expert advice regarding Wills throughout the Greater Geelong region.
This article is general information only and is not legal advice or a substitution for such advice. Always seek professional advice suited to your own circumstances.