by Henry Lane, Attorney
Lane & Hamer, Whitinsville, MA
Despite their frequent mention in late Victorian English literature, orphaned children in Massachusetts are relatively rare today. Even rarer is the orphan child with even a modest inheritance. Nevertheless, attorneys have always advised parents with minor children that they should have a will that makes provision for their children in the event of the parents' untimely demise.
Typically, parents had wills prepared which included provisions naming guardians to take physical custody of any minor children and to raise them as their own parents would have. If the parents had significant assets or life insurance, the wills would also frequently appoint a trustee to manage any property left to the children. In many cases the appointed guardians and trustees might have been the same individual, but if there were significant assets, parents would sometimes choose an individual who had demonstrated good parenting skills as guardian, and another person who demonstrated good money management skills as the trustee to manage the children's financial future. In cases where the parents had more sophisticated financial circumstances, sometimes the trustee would be a bank or trust company.
This basic plan worked well but had one major drawback. The guardian or trustee had an obligation to prepare and file a financial accounting with the probate court every year. In addition to filing the financial account, the account had to be allowed by the court which required notification of interested parties and sometimes an actual court hearing. Although the time and expense involved in having the annual accountings approved was sometimes justified in cases where the children inherited significant wealth, in the case of a more typical family, the time and expense were a significant burden and not justified by the amount of money involved. In addition, annual accountings filed with the probate court are available to the public and therefore did not afford the level of privacy that many families desired.
In order to avoid the time and expense of filing and petitioning for approval of annual accounts as well as to avoid public scrutiny, many lawyers would recommend that a trust for minor children be set up independently of the will. The parents would then pass property to the trustees of the separate trust for the benefit of the children in the event of the parents' demise. The separate trust would still allow for accountability by providing for review by other family members or trusted advisors. Although the creation of a separate trust was an effective work- around, it did involve the complexity and expense of having to create two separate sets of documents initially and also amending two sets of documents if any changes were required. The cost of creating, maintaining and administering two separate sets of documents can be justified if there is significant wealth involved, but for the more modest circumstances of most young parents it only added unnecessary expense and complexity.
The recent adoption of the Massachusetts Uniform Probate Code has eliminated the requirement for the filing and approval of annual accounts by trustees appointed under a will. The benefit of having the will appoint a guardian or trustee to manage the financial affairs of young children can now be realized without the unnecessary burden of probate court oversight. The statistical probability of one's minor children becoming orphans remains remote and in most cases, it is no longer necessary to create a separate trust to avoid the burden and expense of annual accountings.