Most parents in the Livonia area think estate planning is something they’ll get around to eventually. When the kids are older. When things slow down. When there’s more to protect. We hear this constantly, and we understand it. Life is busy. But the hard truth is that parents of minor children have more at stake right now than almost anyone else, and putting off a plan is its own kind of decision, just not one you made on purpose.
An estate plan for parents is not simply a document that says who gets the house. It is a set of legally binding instructions that answers the most important questions your family would face if something happened to you. Families with young children face a genuinely different set of planning challenges than those without, and a thoughtful approach to estate planning accounts for those differences directly. Two core questions need answers: Who will raise your children, and how will your assets actually reach them? Michigan law shapes both answers in ways that catch many parents off guard.
Who Will Raise Your Children if You Cannot?
This is the question that keeps parents up at night, and it should be the first thing your estate plan addresses. Without a guardian designation, you leave your children’s future entirely in the hands of a court system that cannot possibly know what you would have wanted. That is not a comfortable thought, and it should not be.
Michigan law gives parents the ability to nominate a guardian for their minor children through a properly executed will. Guardianship is a legal arrangement in which a designated individual is given the authority and responsibility to care for minor children if their parents are unable to do so due to death, incapacity, or other unforeseen circumstances. A parental appointment generally becomes effective when the nominated guardian files an acceptance, subject to statutory requirements and a minor age 14 or older’s right to object.
And another thing most parents don’t consider: name a backup. Your first choice may be unable or unwilling to serve when the time comes. Michigan law allows you to name successor guardians who take over if your primary choice cannot fulfill the role. Without an alternate, the court process begins again from scratch. We have seen situations where both parents passed and the named guardian had moved out of state, was dealing with a health crisis, or simply felt they could not take on the responsibility. A backup is not pessimistic planning. It is thorough planning.
One clarification worth making here: naming a godparent in a religious context does not create a legal guardianship. Naming a godparent fills a religious role in your child’s life, but you must take further steps to name them a guardian in the legal sense. You can nominate your child’s godparent as a guardian in your estate plan. These are two separate things, and conflating them is a common mistake.
What Happens to Your Assets if You Leave Them Directly to a Minor?
This is where Michigan law creates a real problem for families who have a will but no trust. Under Michigan law, minors can own property but generally cannot independently manage significant assets. So what happens if you leave money or property directly to a child under 18? In Oakland County and throughout the Detroit metro area, probate courts may establish a conservatorship or require funds to be placed in a restricted account. That means annual reporting requirements, court oversight, and added expense, none of which you would have chosen if you had planned ahead.
A trust for minor children sidesteps this problem entirely. When you create a trust and name a trustee, you are designating a person you actually know and trust to manage those funds according to your specific instructions, not a court’s general oversight. The trustee manages the funds on behalf of the minor, according to your specified terms. You can set conditions for distribution, like age milestones or specific purposes like education or healthcare. This ensures the funds are used in a way that aligns with your wishes. That level of control is simply not available through a basic will that leaves assets outright to a child.
For families with more modest estates, Michigan does offer another option worth knowing about. Recognizing that people with smaller estates may not want to commit the time or expense to creating a revocable living trust, Michigan has adopted legislation to allow minors to inherit or receive gifts of money without the need for a conservator. The Michigan Uniform Transfers to Minors Act allows minors to receive money or gifts through a special account that is easy to set up at any bank. These UTMA accounts have limitations, though. In Michigan, custodial property generally transfers at age 18, although certain transfers may be delayed to as late as age 21. For certain UTMA transfers, the governing instrument may specify an age up to 21. Once that age is reached, the funds transfer outright to the child with no conditions attached. A trust gives you far more flexibility over how and when distributions happen.
The Life Insurance Problem
Life insurance is often the financial backbone of a young family’s estate plan. Term policies are generally affordable for parents in their 30s and 40s, and the death benefit can replace years of lost income. But there is a critical mistake that shows up again and again: naming a minor child directly as the beneficiary on a life insurance policy.
Minor children cannot directly receive life insurance proceeds. To avoid court-held funds, consider establishing a trust and naming a trustee to manage those assets for your children’s benefit. The same court-supervised conservatorship problem that applies to inherited assets applies here. The insurance company cannot simply hand a check to a ten-year-old. The money gets tied up in a process that costs time and money, and the outcome may not reflect what you intended at all.
The cleaner approach: name your trust as the beneficiary of the life insurance policy. The trustee then manages those proceeds under the terms you set, distributing funds for the children’s care, education, and other needs without court involvement. Properly executed beneficiary designations are a critical element within an effective Michigan estate plan. This includes naming beneficiaries for retirement accounts, life insurance policies, and other financial accounts such as bank accounts and investment portfolios. If beneficiary designations are not properly updated or aligned with the overall estate plan, it can lead to unintended consequences. Retirement accounts carry the same concern. Review all of them.
Documents for You, Not Just Your Children
About those documents that protect you while you are still alive. Parents often focus so heavily on planning for their children that they overlook the documents that matter if they become incapacitated rather than deceased. A durable financial power of attorney names someone to manage your financial affairs if you cannot. Without one, your family may need to go through a court proceeding just to pay your bills.
On the healthcare side, Michigan recognizes several forms of advance-care planning, including a durable power of attorney for healthcare, a living will, and a do-not-resuscitate order, although living wills are not specifically recognized by statute. One is the Durable Power of Attorney for Healthcare, which can be used in both inpatient and ambulatory care settings. The other is a Do-Not-Resuscitate Declaration, which is for non-hospital settings. A healthcare power of attorney names a patient advocate who can make medical decisions on your behalf when you cannot. Michigan doesn’t have a specific statute for living wills, but you can still include end-of-life preferences in a durable power of attorney for healthcare. These documents matter enormously for parents, because an incapacitation without proper documents in place can leave your children in a deeply uncertain situation even while you are still living.
We work with families across Wayne County and the surrounding communities every day on exactly these issues. The planning itself is not complicated. Getting started is the hardest part for most people. If your children are young and your plan does not exist yet, or if you have a plan that has not been reviewed in several years, we encourage you to reach out to our team at Creighton McLean & Shea PLC. These are decisions worth making now, on your own terms.
