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It may be the most dreaded thing for parents to contemplate. Who would raise their children, if both parents died?
The most important advice: if you do not have a last will nominating a guardian for your minor children, get it done immediately. Without a last will, the court will decide who will raise your children. Family members are not always selected, and the children find themselves in foster care, if a custody battle between family members erupts.
Who is Best Suited to be Guardian?
A knee-jerk reaction is to name grandparents. However, this is usually not realistic. Will they be able to care for active young children—or live long enough to see them through adolescence?
Good candidates are often siblings or close friends who are parents with shared values. It would be ideal to have the children remain in familiar surroundings. However, if this is not possible, then a loving home with adults who can provide stability and support is better than a second choice in your hometown.
Have a successor guardian and even a third alternate successor nominated in your last will. If your first choice is unwilling or unable to serve, having a second and third choice avoids having the court make the decision.
The Guardian and the Fiduciary
While the guardian provides custodial care, the fiduciary oversees the inheritance of your minor children. In some cases, one person (or a couple) can serve in both roles. However, this is not always the case. Someone who is an excellent caregiver with poor financial skills will do better with the support of a separately appointed fiduciary. Be certain that both individuals can work together.
What is the Fiduciary Responsible for?
A fiduciary is required by law to put the needs of beneficiaries above their own. Parents who own their homes and have one or more life insurance policies need a fiduciary who can manage several hundred thousand or even a million dollars over a period of two or three decades, depending on the age of the children.
While children are legally permitted to inherit wealth when they come of age, most 18-year-olds are not ready. Because many newly minted young adults do not have the financial experience and maturity to inherit in a single lump sum, trusts are often created to control the inheritance, until they are old enough to manage a significant amount of money. Some parents choose to stage distribution of the inheritance in fractional shares upon attaining certain ages. For example, they may have one-third distributed at age 25, then one-half at age 30, and the balance at age 35. In addition, trusts can also include “incentives” to encourage positive behaviors, like graduation from vocational training or college.
What Happens to the Family Home?
If the plan is to have guardians live in the family home with the minor children, the home could be held in trust for the benefit of the children. Will it be sold or kept in the family? Either way, a plan for maintaining the home and its eventual disposition can also be included in your last will.
How Can You Instruct the Guardian and the Fiduciary?
Documents should be created to address the family’s unique circumstances, with as much detail as possible. In addition to a last will and trusts, write a “letter of instruction” to the guardian to explain the personalities, preferred foods, best friends, bedtime habits, etc., of your minor children. You can revise this letter from time to time, as appropriate.
Final Words
Most parents live long enough to see their children grow up and have children of their own. However, bad things do happen. Having an estate plan to prepare for the worst-case scenario does not make it more or less likely to occur. However, it can help you protect everyone you love and everything you have.
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