Estate Planning for Parents of Minor Children in Nebraska

Becoming a parent changes what is at stake in an estate plan. Your plan is no longer only about who receives your property. It also addresses who could care for your children, who would manage property for them, how an inheritance should be used while they are young, and who can make decisions for you if you become unable to act for yourself.

For Nebraska parents, a thoughtful estate plan should coordinate a will, possible trust planning, powers of attorney, beneficiary designations, life insurance, and the ownership of important assets. The goal is to give the people you trust clear authority and clear instructions instead of leaving important decisions unanswered.

Two Different Questions: Who Raises Your Children and Who Manages Their Money?

Parents sometimes treat these as the same decision, but they do not have to be.

The person who is best suited to care for your children may not be the person you would choose to manage a significant inheritance. Your estate plan can address these responsibilities separately.

A guardian is responsible for the child's personal care. A trustee, when a trust is used, manages property under the terms of the trust. One person can serve in both roles, but parents can also select different people based on each person's strengths, location, financial judgment, relationship with the children, and ability to work with other family members.

Thinking through these roles separately can produce a much more practical plan.

Naming a Guardian for a Minor Child in Nebraska

Nebraska law allows a parent to appoint by will a guardian for an unmarried minor child. The appointment is subject to Nebraska's statutory requirements and is implemented through the probate process. See Neb. Rev. Stat. § 30-2606.

Nebraska generally treats a person under nineteen years of age as a minor, subject to statutory exceptions. See Neb. Rev. Stat. § 43-2101.

A guardian nomination gives parents an opportunity to state clearly whom they want to serve if a guardian becomes necessary. Parents should usually consider both a first choice and at least one alternate in case the first person cannot or does not wish to serve when the time comes.

When selecting a guardian, consider practical questions:

• Does this person have a strong relationship with the children?
• Where does the person live?
• Would the children have to change schools or communities?
• Does the person share your general approach to raising children?
• Is the person's household realistically able to take on the responsibility?
• Would the person work well with the trustee or other person managing the children's inheritance?

The goal is not to predict every future circumstance. It is to give your family and the court clear evidence of your wishes.

Planning How a Child Receives an Inheritance

Leaving property outright to a young child can create problems that a properly drafted estate plan can avoid.

A child may not be ready to manage a substantial inheritance simply because money becomes legally available. A trust can allow a parent to decide who manages the property, what the funds may be used for, and when the child ultimately receives control.

For example, trust terms can authorize a trustee to use funds for education, health care, housing, support, or other needs while the child is young. The trust can also delay a child's direct control of the remaining property until an age or ages selected by the parent.

There is no single distribution schedule that fits every family. Some parents prefer one distribution at a particular age. Others prefer distributions in stages. The right structure depends on the amount and type of property involved, the child's circumstances, and the parent's goals.

The person managing the inheritance can also be different from the person serving as guardian.

Life Insurance and Beneficiary Designations Need to Match the Plan

Life insurance and retirement accounts are often among the largest assets a young family owns. These assets commonly pass according to beneficiary designations rather than through the terms of a will.

That makes beneficiary designations a central part of estate planning.

Parents should review who is named as primary and contingent beneficiary and determine whether the designation works with the rest of the estate plan. Directly naming a young child can create administrative complications because the child may not be able to receive and manage the funds personally.

Depending on the plan, a trust may be a more appropriate beneficiary. The beneficiary designation and the trust language must be coordinated carefully so that the intended person receives and manages the funds under the intended terms.

A will, trust, insurance policy, retirement account, and jointly owned property should not be treated as separate planning exercises. They should work together.

What If You Become Incapacitated While Your Children Are Young?

Estate planning also matters while you are alive.

A durable financial power of attorney can identify the person who may act for you in financial matters if you become unable to manage them yourself. Health care planning identifies the person you trust to participate in medical decisions when you cannot communicate or make those decisions yourself.

For parents, incapacity can affect mortgage payments, insurance, household expenses, business interests, education expenses, and the general financial support of the family.

These documents do not replace the guardian planning contained in a will. They address a different problem: who can act for you during your lifetime when you are unable to act for yourself.

Should Parents Use a Will or a Trust?

Many parents can build an effective estate plan around a will. Others benefit from a revocable living trust.

A trust may be particularly useful when parents want greater control over how children's inheritances are managed, own real estate in more than one state, want to reduce probate exposure for properly funded assets, or have family circumstances that require more detailed distribution instructions.

A trust does not eliminate the need for the rest of the estate plan. Parents with a revocable trust commonly still need a will or trust, powers of attorney, health care documents, and coordinated beneficiary designations.

The question is not whether trusts are always better than wills. The question is which structure best addresses the family's property, children, goals, and administrative concerns.

Coordinate Both Parents' Plans

Married parents should review their plans together even when they own different property.

Each parent should consider guardian nominations, personal representatives, trustees, financial agents, health care decision-makers, beneficiary designations, and contingent beneficiaries.

The plans should also address what happens if one parent dies first and what happens if both parents die within a short period of time.

Conflicting documents and beneficiary designations can make administration harder at exactly the time the family needs clarity.

When Parents Should Review Their Estate Plan

An estate plan should be reviewed when the family changes.

Important review points include:

• the birth or adoption of another child
• marriage or divorce
• a guardian or trustee moving away or becoming unable to serve
• a significant change in assets
• buying or selling a business
• buying real estate in another state
• changes in life insurance or retirement benefits
• a child developing circumstances that require different planning
• moving to or from Nebraska
• significant changes in the law

A review does not necessarily mean every document must be replaced. Sometimes a targeted amendment or beneficiary update is enough.

Common Questions From Nebraska Parents