Keep Perspective: If just thinking about someone else raising your child makes you cry, mentally prepare yourself for the conversation. Remind yourself that fewer than 5% of children lose a parent before they reach age 18, and fewer still lose both parents and need a guardian. Even though it’s important to plan in case it did happen, the fact is that it’s statistically unlikely your children will need a guardian. Celebrate that you’ll be there for first steps, prom, learning to drive, and the birth of your grandchildren! Having a calm and rational mindset will help you navigate the conversation and make a better choice of guardian (who most likely will never have to serve in this important role).
Consider Creating a Panel: Although clients typically name a single person or a couple to serve as guardian, consider naming the people closest to you and your child(ren) and have that group of people name a guardian when one is needed instead. This technique is especially useful if (1) you and your spouse are having trouble agreeing, and/or (2) you want the added flexibility of not having to change the guardian as the kids grow. For example, you might ask that both sets of grandparents, aunts and uncles and a close friend gather to discuss who would be the best guardian if one is ever needed. Keep the group small, name people who will work together, and make sure they are people with a history of good decision-making who will have the kids’ best interests at heart.
Age Matters: The age of your proposed guardian matters, and the age of your children matters. Your parents might have happily taken on your first infant child, but do they still have the stamina for your three teenagers? Very young children are portable, you can send them to your sister in Wichita and they’ll adjust. But your middle-schooler has friends and teachers and neighbors they may need for emotional support if they’re grieving. And your high schooler is highly likely to prefer to live with her friend’s family and finish high school in her home town. Your choice of guardian is likely to change over time as the kids and proposed guardian’s lives evolve.
Shared Values is More Important Than Geography or Being Related: Many young parents choose a family member to serve as guardian for their new child. They know their family members shares their values.
A phenomenon we see a lot is that clients who grew up in one part of the country but move to another part, develop values that may be from those of their family of origin. For example, a person who grew up in the Midwest but moved to the Pacific Northwest may now have more in common with their friends and neighbors here than friends and family “back home”. You’re not limited to naming family. Consider naming friends who share your parenting style and values.
Seriously Consider Naming Separate Guardians and Trustees: One of the biggest issues we run into in naming guardians and trustees is conflicts of interest. We are often asked if you have to appoint the same person who serves as the guardian to manage your child’s money. The answer is a resounding “No.” There are compelling reasons to separate those two functions. For one, the skill set needed to parent a child is a very different skill set than investing, budgeting and managing money. A person who is great with money might not be great with children, and vice versa. Secondly, if the guardian has other children, or has financial pressures, it’s helpful to them if you don’t put temptation in their way. If there’s a disparity between what is available to finance their child’s dreams and the trust fund you left for your child, let a third-party safeguard distributions for your child’s benefit by naming a separate trustee. Thirdly, the trustee will work with the guardian to set up a monthly budget and the guardian can have your child’s bills sent directly to the trustee. It might be a gift to the guardian not to also burden them with money management.
It might be that the same person who serves as guardian IS also the best person to manage your child’s inheritance money. If you’re confident that’s the case, you can name the same person as both guardian and trustee.
Letter of Instructions: Your trust should have solid, but fairly general instructions for how the funds should be managed on behalf of your child. Many loving parents (and some estate planning practitioners) are tempted to spend extra time overdrafting custom instructions for the care of a toddler or teenager who will outgrow them! Avoid the expense and complexity of having to amend or restate your trust to remove outdated provisions as your child grows up by writing a Letter of Instructions instead. Pick a date each year (your child’s birthday is a great time) to write a personal letter to your guardian and trustee telling them what your child is like this year. Describe what your hopes are for how any inheritance would be used to foster character traits you care about. Your written instructions will then provide useful and timely guidance to any guardian or trustee when they actually need it.
Review Your Estate Plan Annually: You will probably only need to see your estate planning attorney every three to five years – things move slowly in our world! But you should sit down and review who you have named in these important roles every year. If your preferences have changed, contact your estate planning attorney to update your plan. A well-thought-out, well-written plan will last you for many years and provide peace of mind every parent can use!
White Oak Wills & Trusts, LLC
