Guardianship and Fiduciary Responsibility for Your Kids
Having children is one thing that motivates many people to create an estate plan. While it isn’t an easy thing to think about, most parents want a say in how their young children would be raised if disaster struck. That desire to do what’s best for your kids, even after you’re gone, is enough to overcome any hesitancy about the estate planning process.
Without a Plan, Uncertainty Reigns
Your last will and testament should name the person or people who will take care of your children in your absence. If there is no will, the consequences to your kids can be severe.
A custody battle among family members or close friends can land your children in foster care while the courts work through the dispute. You might be surprised and disappointed by the outcome of this dispute. All this can be avoided by nominating a guardian in writing.
How to Choose the Right Guardian
If you had a good upbringing, it’s natural to think of your parents first when naming a guardian. While they might be your first choice to watch your kids for a night or weekend, they may not be the best choice to raise your kids for the long-haul.
Caring for small children takes a lot of energy. Grandparents may not have the physical or emotional stamina to do the job right. Piggyback rides, games of catch, rounds and rounds of hide-and-seek, and many other childhood experiences are a lot to ask of an older guardian. You have to consider how long your children will need someone to turn to. Can grandparents provide support through teenage years and into adulthood? What about marriage and starting families of their own?
In many cases, the best choice is a brother, sister, or close friend with parenting experience. In these cases, you should consider the person’s values and life circumstances. Who is best equipped to teach your children the life lessons that are important to you? Who can give them the support, love, and lifestyle they need to thrive?
These factors are more important than keeping your kids in the same school or hometown. That said, it’s important to think of exactly what your children’s lives will look like with the person you select.
When picking a guardian, it is a good idea to list more than one possibility. A successor and alternate successor guardian will help reduce the chances that the courts will have to make this decision for you. Your first choice may not be in a place to take over as guardian of your children, so always name at least one backup choice.
The Financial Side of Taking Care of Children
A guardian is responsible for taking care of your children’s upbringing. Your top choice for this role may not have the skill to handle the financial part of handling the inheritance you leave your kids.
Overseeing an inheritance for the benefit of minor children can be complicated. Many parents choose to name a fiduciary who handles this work separately from the role of the guardian.
If you are considering a separate guardian and fiduciary, it’s important to choose two parties who will be able to collaborate for the good of your children.
Fiduciary Responsibility
The role of a fiduciary is dictated by law. A fiduciary must make decisions based on the needs of the beneficiary, rather than the fiduciary’s own needs. If the estate includes things like a family home, life insurance benefits, pension benefits or other assets, the work needed to manage all that for the benefit of your children over many years is substantial.
The length of the fiduciary relationship should also be considered. Many parents shy away from putting the entire lump sum of an inheritance into the hands of an 18-year-old. That amount of money, given all at once, can spell disaster for someone so young. You can provide instructions on how this problem should be handled for your kids.
Inheritance trusts give you, through the fiduciary, power to control how the inheritance is distributed. Should it be granted in stages based on age? Should it be tied to signs of maturity and development, like finishing school? You should consider what you think is best for your kids and make sure your estate plan spells that out clearly.
Estate Planning and the Family Home
In some cases, the choice of a guardian will influence the plan regarding the family home. Some guardians would welcome the offer of moving into your family home to provide your kids with that additional stability. Others would not be willing to uproot their own lives to relocate.
Your plan should consider whether the home will be sold to fund the trust for your children, or if it should be kept and maintained to give to them when they reach maturity. If the family home is to be kept until the children are grown, then the estate plan must set aside funds for the home’s upkeep – for example, mortgage, property taxes, insurance, major repairs, and maintenance.
Make Your Wishes Clear
The instructions you leave for the guardian and fiduciary can play a large role in how your children are taken care of going forward. It is important to leave behind clear, detailed documents laying out your thoughts and preferences. The last will and testament, as well as the inheritance trust instructions should be supplemented by information they can use to make their decisions.
Tell your preferred guardian what your children’s likes and dislikes are. Tell them about favorite stuffed animals or bedtime routines. Tell them about your children’s friends and relationships with family. Creating these instructions, and keeping them up to date, can help a guardian protect and support your children.
Hope for the Best, Plan for the Worst
Estate planning is a powerful tool for protecting yourself and the people you hold most dear. It’s fair to hope and expect that you will be there for your kids, to raise them, love them, and provide for them as they grow into adulthood.
If tragedy strikes, however, you want to make sure you’ve done everything you can to help them through a terrible time. Choose a guardian and fiduciary. Provide them with the information they need to watch over your children in the best way possible. For help, reach out to the Law Office of Janet L. Brewer by calling 650-325-8276 or send us a message.
