A Child Has Died - What to Do?
There can be no doubt that the death of a minor child is one of the greatest shocks life can deliver. It would be presumptuous to believe anything I write can prepare for such devastation. No one can ever prepare for the cascade of challenges that will come with such an event. Not only are there legal and financial challenges you must deal with, but all of these challenges come at a time of deep emotional crisis, so deep they almost feel physical. Nevertheless, help is out there, and the resources available can go a long way to help ease the burdens that you and your loved ones will face during this terrible time.
Much has been written about the emotional, spiritual, and mental challenges that you will face when a child passes away and how you can navigate these challenges. The internet provides a wealth of resources on these topics, and we encourage you to seek them out. As a result, this article will focus on the financial and legal aspects of dealing with a child’s death.
Life insurance. Many families purchase life insurance on one or both parents to ensure that if the family’s source of income ends due to the death of the parent, the family will not be left without financial support. It is much rarer for parents, however, especially young parents, to take the extra step of purchasing a life insurance policy for a minor child. The death of a child is an unthinkable event, and so it is not surprising many parents refuse to even go there in their minds, let alone take the step of purchasing a life insurance policy.
That being said, many good life insurance agents recommend an insurance rider on a parent’s life insurance policy that provides additional coverage for a minor child that can at least pay for funeral expenses. These riders typically add minimal additional premium cost and, as a result, are often simply forgotten about by parents. If you have a life insurance policy you obtained years ago that you still pay for, call your insurance agent to see if the policy has an insurance rider that provides any amount of coverage for a child. If so, these extra insurance funds can be a valuable benefit to help ease the financial burden associated with your child’s funeral and burial costs.
Employee benefits. If you discover that you do not have benefits for a child’s death through your life insurance policy, the next step is to reach out to your employer’s human resources department to determine whether your employer offers any benefits for this type of event. People are often surprised to learn that their employer has purchased insurance coverage for events just like this to assist employees. Even if a formal insurance policy does not exist, employers (and even coworkers) are often eager and willing to pitch in with company and personal funds to help in a tragedy.
Many employers also offer benefits that assist with the costs of grief counseling. If your employer offers such benefits, please utilize them. The benefits are yours to use. A trained grief counselor can be a safe and valuable resource for helping you cope with your loss.
Additionally, many employers offer bereavement time off. If such paid or even unpaid leave is available, do not be afraid to use it. Your situation is exactly the reason this benefit is offered.
Crowdfunding. Another method for assisting with your child’s medical, funeral, or burial costs is the use of crowdfunding resources such as GoFundMe or Funeralfund. These are online fundraising platforms that allow an organizer to reach out through the web and social media to solicit donations to help pay for funeral and related expenses such as grief counseling. These platforms usually charge minimal processing fees. Those donating to the fund can often do so anonymously if they wish. The ability to quickly get the word out and the convenience it offers to friends, family, coworkers, and even strangers to help your family in your time of need makes this a particularly helpful method to ease the financial burden of the loss of a child.
If you do not feel comfortable organizing a crowdfunding campaign for yourself, consider asking one of your more internet-savvy friends or family members if they would be willing to do so on your behalf. You will likely be surprised by how eager others are to help. Remember, accepting such help is one way you can allow others to mourn with you and do something when they otherwise feel powerless. Do not be afraid to ask.
Your child’s property. In some cases, your minor child may have money that could be used to pay for funeral or last illness expenses. Parents or grandparents will often make gifts to minors using accounts provided for by state law, referred to as Uniform Gifts to Minors Act (UGMA) or Uniform Transfer to Minors Act (UTMA) accounts. These accounts allow gifts to be made to a minor child without the need of a court-appointed guardian or conservator to manage the money or property. When a deceased child has a UGMA or UTMA account, the money is typically payable to the child’s estate unless a beneficiary designation has been created to direct where those funds should go. If a parent has not been named as the beneficiary of the account and it is therefore payable to the minor’s probate estate, this money can typically be used to pay last illness and funeral expenses.
If a significant amount of money is in the account, a probate may be necessary for the family to claim those funds. Most states, however, have a small estate affidavit process whereby a full-blown probate court action can be skipped if the money in the account is less than a certain amount (for example, less than $40,000 in the District of Columbia and $50,000 in Maryland and Virginia).
Social media and digital assets. Today, many youth people, particularly teens, have an extensive social media presence, including Snapchat, TikTok, YouTube, Instagram, and Facebook. Some of these social media accounts can be shut down or converted to a memorial account that makes clear the user has passed and freezes the account so no one can fraudulently post. You should consider shutting down any social media accounts or memorializing the accounts so online friends will know the user has passed away.
Some social media accounts can generate income if the minor has monetized the account. Blogs, websites, and YouTube channels can generate ad revenue, which can be significant in some cases. If you know your child has accounts like these, it will be important for you to take the steps necessary to claim those accounts and ensure that the revenue generated by their content is used appropriately. An estate attorney can help ensure the social media companies deal with you fairly according to applicable digital asset laws.
Charitable organizations and memorial funds. Many families have found considerable solace in creating a charitable fund to benefit others as a way to honor the memory of their deceased child. Such organizations can provide scholarships, donate to medical research, address social and community needs, and otherwise do good in the world. The money for establishing such a fund may come from many sources described above such as excess insurance proceeds, crowdfunding donations, and even digital asset revenues. If establishing such a fund makes sense in your circumstances, getting help from an attorney or the planned giving department of an existing charitable institution is an important step. There are many legal and tax implications; but with the right help, such a fund can be a wonderful way of remembering your loved one and making their presence felt far and wide for decades to come.
Estate planning updates. After a child’s death, you should also remember to update your estate planning documents. In many cases, estate planning documents like wills and trusts are drafted in a way that do not require the removal of the child’s name after the child’s death. Instead, estate planning documents are often drafted to automatically address the scenario where one of your children has predeceased you, thereby relieving you of the need to update the documents. It may be necessary to update documents in some cases, however, such as when specific property is designated to pass to a particular child and that child has passed away.
Additionally, you should update your beneficiary designations if you have named your child as a beneficiary on a life insurance policy or a retirement account, such as an IRA or 401k. In some cases, naming a deceased individual as the beneficiary of an insurance policy or retirement account can have significant adverse legal and tax consequences.
The Parade of Horribles
Thinking, nevermind talking, about the death of a minor child is a parent's worse nightmare. But, I always advise my clients that my job to discuss the parade of horribles they do not want to discuss or think about, or that keep them up at night. And, high on that list of horribles is thinking about and handling the financial and legal aspects of a child’s death are the last thing that anyone would ever want to do. But help is available if your estate planning attorney has experience with these types of tasks. He or she can be a valuable resource when you need a helping hand. Give us a call at 301.892.2713 or click here for a complimentary 30-minute consultation if we can help you or someone you know in any way. We are here for you, in person or virtually, at this most difficult time in your life.
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