One key component of estate planning for parents is to set up a testamentary trust. As Sherry Lueders discussed in this blog post, a testamentary trust “is a trust that is set up in a will. This is not the type of trust you transfer all your assets over to during your lifetime. Rather, a testamentary trust becomes an asset-holding entity only after you die. The personal representative/executor of your estate will then transfer your assets to the trust under the terms of your will. In your will, you can designate a Trustee to manage the assets to be held in trust for your children, and direct distributions to be made for the children’s health, education, support, and maintenance. You can also designate the ages at which your children would inherit outright any balance remaining in the trust once they are adults – or spread it out over two or three distributions made at different ages.”
A second key component of estate planning for parents is to nominate a guardian who will “raise their children if the unthinkable happens”. RCW 11.130.215(b) provides that “[t]he court shall appoint a person nominated as guardian by a parent of the minor in a probated will or other record unless the court finds the appointment is contrary to the best interest of the minor.”
Parents often ask whether the trustee of the testamentary trust and the nominated guardian need to be the same person. They do not. The two roles involve completely different skill sets. A trustee needs to be well-organized, a good recordkeeper, and an able financial manager. A guardian needs to provide love, care, and guidance to a child whose parents are deceased. It is not unusual for someone to nominate a close family member or a trusted friend to serve as guardian. Parents tend to pick someone they know, trust, and with whom they share common values. A trustee, on the other hand, might be a professional fiduciary who can provide neutral and skilled financial recordkeeping and management.
Some parents are concerned that it may be insulting to name two different people to serve these roles. To the contrary, it may actually be an act of kindness toward the person nominated as the guardian to not assign them the various tasks associated with the trustee’s financial management duties. The nominated guardian will be able to rely on financial support for the care of the orphaned children but will not additionally be burdened with the trustee’s fiduciary responsibility of carefully managing the trust assets pursuant to the requirements set forth in the testamentary trust and the Uniform Fiduciary Income and Principal Act set forth in Chapter 11.104B RCW.
Do you need guidance in making decisions about who should serve as a testamentary trustee and a guardian for your children? We’d be happy to help.
This post is for informational purposes and does not contain or convey legal advice. The information herein should not be used or relied upon in regard to any particular facts or circumstances without first consulting with an attorney.