KEVIN KINGSTON and MICHAEL CYRS
Although it is unpleasant to think about, part of planning for the future includes considering who will care for your minor children if you become incapacitated or die. If you have children under the age of 18, appointing a legal guardian will not only help provide you peace of mind, but it can also help ensure a smooth transition for your children in a very difficult situation.
What is a legal guardian?
A legal guardian is someone other than a parent who has the authority to make decisions related to a child’s care and who will provide for them financially, if something happens to the child’s parents.
Often, parents appoint a relative, such as a child’s aunt, uncle, or grandparents, to fulfill the role. However, courts can also appoint a legal guardian, such as foster care, if no prior arrangement exists.
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An estate planning attorney is an excellent resource for helping you set up a guardianship and, working with a fiduciary financial adviser, arrange your finances to provide for them.
Preparing for attorney
Take these steps to prepare for meeting with an attorney:
1. List What Is Important to You
Is it important that your child’s guardian shares your religious views and values? What about your views regarding your child’s discipline, education, activities outside of school, etc.? Would you want your child to be able to move to where your appointed guardian lives, or would the guardian need to move to your residence?
2. Identify potential guardians
Taking on someone else’s children is a life-changing decision for a potential guardian. Factors to consider include the age, physical and mental ability of your potential guardian, financial readiness, the potential guardian’s relationship with your children, and, if they have other children, their children’s relationship with yours.
You may want to specify that the chosen guardians serve “as long as they are married.” Or perhaps you want to simply choose one person in the couple as guardian, specifying that they may serve “whether married or single.”
3. Engage in conversation with potential guardians
Ask about their home life and their comfort taking on a child or children, particularly if they are in the process of creating their own family. If you plan to leave an inheritance for your child, would you consider providing the guardian with funds to help with expenses?
Outline any plans you may have to make sure your child will be taken care of financially. Ask for their permission before proceeding.
4. Create your estate documents
These may include a last will and testament, which creates a testamentary trust at your death to manage assets for your children. Or a revocable living trust (RLT) that will hold title to your assets during your lifetime, with specific provisions, instructing your trustee how to provide for your children financially, if you pass away.
A fiduciary financial adviser, working with your estate attorney, will assist you with arranging for adequate assets to provide for your children. You may want to designate certain assets and income that the assets generate to be used by the guardian for the financial support of your children.
Ideally, these assets will be held in trust, providing management and instructions to the trustee for utilization by the guardian, especially if you desire to provide an inheritance for them when they reach a later age.
Naming a trustee, who is not the guardian, may provide additional “checks and balances” that the assets are utilized as you intended, for the support of your children.
If your current assets are not adequate to meet your objectives, consider purchasing adequate life insurance. Your attorney and adviser will coordinate the title and beneficiaries of your assets with your estate planning documents.
5. Review and update your plan
Let’s face it, things change. The sister who agreed to be your child’s guardian may now have children of her own and can’t take on one more. Your parents’ health or capacity may no longer allow them to serve as guardian or trustee.
As with every estate plan, it’s a good idea to review and update your plan every few years. As a parent, you want the best for your children. Take time to plan now, instead of potentially leaving their futures to strangers.
Your choices will likely be better than not deciding, and you can always make a change.
This is intended for informational purposes only. You should not assume that any discussion or information contained in this document serves as the receipt of, or as a substitute for, personalized investment advice from Savant. Please consult your investment professional regarding your unique situation.
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Kevin Kingston, CLU, Chartered Financial Consultant, is managing director and financial adviser at Savant Wealth Management; savantwealth.com. Michael Cyrs is senior director of wealth transfer at Savant.
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