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Wills and children

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. Read more about Trusts, wills and estates.

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