Estate planning for young families is vital. Despite people thinking that estate planning is done towards the end of your life, nothing could be further from the truth. Families with young children should be the first to think about estate planning.
Estate planning by young parents is incredibly beneficial for their children. The results of not creating an estate plan, if even one parent were to pass away, could be terrible for the remaining parent and children. To understand why, we need to first understand what is commuinty property and seperate property and the differences between them and what happens when a parent passes away without an estate plan.
What Is the Difference Between Separate and Community Property, and How Does the Court Determine Which Is Which?
Generally, property acquired during marriage is presumed to be community property. This means that it is owned jointly by both spouses. However, there are exceptions, such as when there is clear evidence to the contrary, like a written agreement. The court will also examine the manner and timing of the acquisition in question and the funds used to purchase it.
On the other hand, separate property is property that is owned by one spouse individually, not jointly with the other spouse. This distinction is crucial because it determines how the court will distribute the property in the absence of an estate plan.
What Happens When a Parent Passes Away Without an Estate Plan?
Let’s start with the worst possible scenario: what happens when you pass away and leave behind a spouse and minor children?
When a married person passes away without an estate plan, the court will divide the deceased’s property as follows:
The deceased’s one-half of the community property will always go to the surviving spouse.
The court will distribute the separate property as follows:
- If an individual had a spouse and one child at the time of their passing, the surviving spouse and the sole child would each get one-half of the separate property.
- If an individual had a spouse and more than one child at the time of their passing, the surviving spouse would get one-third of the separate property, and the children would get the remaining two-thirds.
This means that the surviving parent has a vested interest in the court categorizing any item as the deceased parent’s community property, since the court will distribute it solely to the surviving parent. However, if the court categorizes any item as separate property, the surviving parent will have to share it with the children.
Guardian Ad Litem - The Nightmare of the Surviving Parent
To summarize the paragraph above, however good their intentions may be, the remaining spouse has a conflict of interest in representing their minor children’s interests in court. For this reason, the court appoints a Guardian Ad Litem, a lawyer, whose job is to represent the minor children’s interests in the probate.
So now, you not only have a single parent, a recent widow or widower, having to go through the grueling California probate process (to see how bad the probate process in California is, read our article “The One Crucial Reason to Have a Revocable Living Trust), you also have a Guardian Ad Litem. The Guardian Ad Litem may be overzealous and unprofessional. Probate may be held up in court due to an unprofessional Guardian Ad Litem. This could mean that a very long period can pass until the surviving family receives the deceased’s estate. Such delays could potentially cause a financial burden on the surviving family members.
I personally know a mother of four minor children. Her husband passed away suddenly in April of 2023. As I am writing this, it is May 5, 2025 - the probate is still unclosed due to multiple holdups of the Guardian Ad Litem.
I hope it now clear why families with minor children never want to find themselves in probate court and why estate planning for young families is vital.
Now that we understand the importance of avoiding probate, let’s discuss the advantages of creating a revocable living trust to protect your children and remaining spouse.
Protecting Your Spouse
You and your spouse can create a revocable living trust together, in doing so, you can decide that when you or your spouse pass away, the remaining one of you will have full control of the assets in the trust (thus avoiding the surviving spouse’s need to go to probate court) and that when both of you pass away the assets would go to your children.
Protecting Your Children
You Cannot Leave Assets Outright to a Minor - Use a Revocable Living Trust Instead
Under the California Probate Code (for example, §3401 and §3413), minor children cannot receive significant amounts of inheritance outright. Meaning, that if you pass away and assets are to go to a minor, the assets, in the vast majority of cases, will have to be held through a guardian or a trust that will have to be appointed by the court - both are time consuming and cumbersome processes that can be expensive.
Advantages of Creating a Revocable Living Trust to Hold and Administer Assets to Your Children
If you create a revocable living trust while you are alive, you can designate who will be the successor trustees of that trust. The successor trustees are responsible for holding and administering any trust assets.
Additionally, creating a revocable living trust allows you to define the terms on which your children will receive the trust assets.
How many people do you know who were responsible enough to receive a large sum of money at 18 or 21? Were you? In your revocable living trust, you can dictate the terms on which your children will receive their portion of the trust estate, based on your beliefs and values:
Example 1 - Half at the age of 25 and half at the age of 30
Example 2 - Half upon graduation from a four-year college degree and the remaining sum at 30.
Example 3 is for people whose children are bad with money - every month, the trust will distribute $4,000 to Amanda Jane, the Settlor’s daughter.
You can see how creating a revocable living trust allows you to control the distribution of your assets to your children according to your wishes and beliefs.
The question I sometimes get from parents is: “But what if my children are still minors but need the money for essentials such as food or a hospital bill? I always explain that the law allows the trustee of a trust, of which some beneficiaries are minors, to distribute trust assets for HEMS - “health, education, maintenance, and support”, even while the beneficiary is a minor.
Making Sure You Decide Who Takes Care of Your Minor Children
You do not want a judge to decide who would raise your minor children if both you and your spouse passed away.
Not leaving listed guardians in your estate plan to care for your minor children might mean that they are cared for by a family member who may be well-meaning but that you do not trust or have values different than those you want your children to be raised with.
However, if you list your preferred guardians for your minor children, the judge will, in the vast majority of cases, honor your wishes.
Estate planning for young families is crucial and is one of the most important things that young families can do. Proper estate planning will ensure the well-being of the remaining family members, most importantly any minor children.
Not having an estate plan in place can be devastating to your family’s well-being.
If you wish to discuss with me how I can assist you with creating your ideal estate plan to protect and help your family, please fill out the contact form, and I will reach out to you shortly!