Leaving money for your children

While I’m sure your children are wonderful, self-cleaning, and obedient at all times, they still cost money to raise.  A lot of money.  Ensuring your children’s financial needs are provided for in the event of your death is a major concern for most parents.  Life Insurance is a generally a relatively inexpensive way to protect your children’s future.  How much insurance you need depends on a number of factors.  I would recommend that if you and/or your spouse don’t have life insurance or are unsure if it would be sufficient to support your children into adulthood (and possibly through college), you consult a financial planner.  If you don’t already have one, might I recommend Karen Groves at Thrivent Financial in Burnsville.  She did a great job for me and treated me like I was an important client, even though I’m sure my term life policy was hardly worth the time she and her associate, Elizabeth McCray, put into it.  They even researched law school scholarships for me when I admitted that I hadn’t applied for any!  Now that’s personal service.

Even if you have life insurance or other assets, you still need a way to pass them to your children.  We’ll discuss choosing a Property Guardian (PG) in the next post, so let’s just pretend that you already have someone picked out to manage your children’s finances.

If you’re a very trusting person, you can name a PG for your children and leave no further instruction as to how the money should be spent.  The PG will manage the money until the child is a legal adult (18 in MN).   Once the child reaches 18, they get it all with no supervision or strings attached. *shudder*

A slightly more restrictive tool is to pass money through the Uniform Transfers to Minors Act (UTMA).  The age of majority under this act is set by state law—age 21 in Minnesota.  That would give your child three more years to mature before receiving a sizable sum of cash.  Again, the individual you choose to serve as PG would control the money until the child reaches 21 and the powers of the PG under the UTMA are set by state law. 

If you would like to have more control over when, how and for what purpose your children receive financial support, then a trust (or trusts) are a better choice for you.  Although they do cost more to set up, they provide tremendous flexibility and can be customized to meet the needs of each child.  You can set one trust for all of the children to draw from or separate trusts for each child and the trusts can last until a set age, until the last child dies, or any point in between. 

Pin It