Guardians – Estate Planning For Your Children

When creating a Will, there are a range of factors you need to consider around executors, beneficiaries, and asset division; but as a parent, appointing a testamentary guardian for your minor children (a child under the age of 18) may be the most important decision, and having it clearly determined can help reduce any uncertainty in the event of your death.

Testamentary Guardian

A testamentary guardian is an adult that you appoint in your Will to be responsible for making decisions about the long-term care, welfare, and development of your child / children until the age of 18 years, including matters such as their education, health, living arrangements, visitation with family, involvement in extra-curricular activities and religion.

Many people mistakenly believe that this will automatically fall to their parents or siblings will be responsible for the care of their minor child / children upon their death.  However, unless a testamentary guardian is appointed under your Will, any person with “sufficient interest”, like a grandparent, aunt, uncle, sibling, step-parent or family friend can apply for guardianship of your child / children.  In this instance, the Family Court of Australia decides who should become the legal guardian based on the interests of your child / children – not necessarily who you would choose.

For this reason, it is important to appoint a testamentary guardian whilst you are living, to ensure your child / children will be cared for by the right person should anything happen to you while your child / children is still under 18 years of age.

Surviving Parent

In the event one parent passes away, the surviving parent will usually be the legal guardian of your child / children as pursuant to the Family Law Act 1975 (Cth) (“the Act”).  Each parent of a child who is under the age of 18 years has parental responsibility for that child, irrespective of any change in the relationship of the child / children’s parents.

Parental responsibility is defined as “all duties, powers, responsibilities and authority which by law, parents have in relation to children”.  In this situation the provisions of the Act will take precedence over the appointment of a testamentary guardian in a Will unless, there are circumstances to reflect that is not in the best interests of the child / children.  Such circumstances may include, where there are existing Family Court orders removing parental responsibility from the surviving parent, a restraining order against the surviving parent, incidences of domestic violence perpetrated by the surviving parent or a history of drug or alcohol abuse by the surviving parent.

Further Considerations

Beyond the selection and appointment of a testamentary guardian, you may consider including other details in your Will, such as whether your child / children will:

  • move in with the guardian;
  • continue living in the family home;
  • continue at their current schooling;
  • have access to financial arrangements / support;
  • have the benefit of a Testamentary Trust that has been established in your Will.

Managing Estate Funds – Testamentary Trusts

Minor children cannot legally hold property or receive an absolute gift; that is, the minor is not entitled to receive the gift or share of the estate until they reach the age of 18 years.

However, you can include specific provisions in your Will to deal with the inheritance (via a testamentary trust).  Your Will becoming the trust document upon your passing, appoints an executor / trustee to hold property on trust, manage and invest funds whilst your child / children are minors, and to distribute income and / or capital from the trust as and when required.

The testamentary trust establishes a class of beneficiaries, which includes your child / children and enables the trustee to decide who from the beneficiary class receives income and / or capital and in what proportions.  It is possible to create one testamentary trust for all surviving children or separate trusts for each of your children.

It may also be important to you that any testamentary guardian appointed should not suffer any financial burden whilst acting in this role and for this purpose, your Will can include terms which enables the executor / trustee to provide advance income and capital for the maintenance, education, accommodation, or other benefit to or on behalf of your child / children, or their guardian.

In including a testamentary guardian in a Will we also recommend that a Letter of Wishes addressed to your appointed testamentary guardian be prepared, which can include further wishes and guidance relating to the day-to-day care of your child / children.  Although this is a non-binding document, it can provide a useful tool to any guardian.

Our Wills & Estates lawyers can provide advice on all aspects of your estate planning, including preparing Wills to include specific provisions dealing with minor children.  Contact us today on +61 3 9822 8588.

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