1. You cannot “leave” your custodial rights to your child to another relative. Only a biological parent may exercise custodial rights absent Court Order. In some circumstances, if a parent dies, a family member of the deceased parent may seek custodial rights but it is difficult.
2. Financial Estate Planning for Children.
a. In order to leave significant assets to a minor, a “trust” shall need to be established.
b. That “trust” will be the owner of the asset until the time you designate in the trust document.
c. The trust be run in accordance with the rules established for the Trust at its inception, so it is key to establish clear and effective rules.
d. A “trustee” must be appointed to manage and/or oversee the asset until such time as the asset is distributed to the minor beneficiary. This trustee may charge a fee or not, depending on the circumstances.
e. Depending on the terms of the trust, the trustee may use assets for the benefit of the minor child while the child is still a minor, in accordance the the trust rules. Consider education expenses as a common example.
f. Trusts may be funded by life insurance proceeds but special care need to be taken in the establishment of the trust, timeline, and beneficiary designation within the insurance documentation.
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