Following the sudden death of Michael Jackson and the concerns
regarding his finances and who will care for his children, people
may be questioning their own circumstances. Thinking ahead and
planning for the financial security of your loved ones and deciding
who should look after them and carry out your wishes should be a
priority for any parent.
Making a decision as to how you would like your children to be
brought up and who you would want to be responsible for them after
you have died is extremely difficult and is often far harder than
making a decision about how your financial assets should be dealt
with.
Under English law, a parent with "parental responsibility" can
appoint legal guardians of their minor (under age 18) children to
cover the situation where that parent dies during the children's
minority. Where parents are married at the date of their children's
birth, parental responsibility is automatic for both mother and
father. If the children were born outside wedlock however, a father
does not automatically obtain parental responsibility (although he
can obtain it) unless the child was born after 1 December 2003 and
his name is registered on the birth certificate. Date varies in
Northern Ireland and Scotland.
Assuming both parents have parental responsibility, the
appointment of any guardian will not usually take effect unless and
until both parents die. This can lead to confusion and difficulty
if each parent appoints a different guardian. Agreeing the same
guardian is therefore advisable. Further complications arise in
cases of divorce or separation and where there is a residence order
in favour of one parent.
It may feel sensible to appoint two guardians, so that "each
side" of the family is represented, but this may lead to practical
and emotional difficulties if the two sides disagree as to how the
children should be cared for. Whoever is chosen, it is important to
discuss expectations and wishes with the potential guardian to
ensure that they are happy to accept the role. If not, there is a
risk that the appointed guardian may simply choose to disclaim
their appointment.
It is possible to appoint guardians for your children by Will or
by a signing and dated a written statement. Both methods are
equally effective but many parents prefer for the appointment to be
made by Will so that financial arrangements for the children and
the guardian can be included and the single document can be stored
safely. If a child has no living parent and no guardians have been
appointed, then it is usually necessary for an application to be
made to the court for a guardian to be appointed. The court must
regard the child's welfare as the paramount consideration.
It is possible to indicate in the appointing document or in a
separate letter how you would wish your guardians to care for your
children, including for example, the way in which you would wish
them to be housed, educated or encouraged toward a particular
religion. It is important to recognise that the expression of
wishes of this kind are not legally-binding however and ultimately
the appointed guardian will be free to dictate the manner of the
children's upbringing. Consequently, the choice of guardian remains
all important. These issues can be additionally sensitive if, for
example, the potential guardian would need to move home to
accommodate the children.
Under English law it is not possible for children to inherit
assets until they reach majority at age 18. Therefore, even if your
Will attempts to leave assets outright to your children, there will
be an automatic 'trust' imposed so that the executors or trustees
of your Will remain responsible for the assets until the children
reach age 18. The law in Scotland and Ireland may well vary and
local advice should always be taken.
It is of course common to create specific trusts within Wills so
that children do not inherit until after the age of 18 (even though
this can give rise to an extra inheritance tax cost). Where large
sums are involved, ages of 21 or 25 are often chosen on the basis
that the children are more likely to display a greater degree of
financial maturity the older they get. Trusts can also assist with
asset protection issues (for example, in the context of
divorce).
You should consider whether the same individuals appointed as
guardians should also be appointed as the executors or trustees of
your Will. It can sometimes be sensible to appoint different people
to have the responsibility of dealing with the financial and
administrative aspects of your estate to the people who have the
practical responsibility of caring for your children. Appointing
different people for these roles can also minimise the risk of
conflict or misuse of funds by an appointed guardian.
If you do not make a Will or fail to keep it regularly updated
then your assets may not pass to your children in the way you had
hoped. If you die without a Will, known as dying intestate, the
devolution of your estate will be governed by statutory rules which
can often give rise to a different result than the one you might
expect.
Specific legal advice should always be taken as these comments
relate to the law as it applies in England and Wales and there are
likely to be differences in other jurisdictions.
This article by Hayden Bailey first appeared: BBC
Online, July 2009