First Things

     New parents quickly learn that children’s needs come first. Adhering to that philosophy, parents of minor children should consider two key issues when preparing an estate plan. First, who would take care of their minor children and second, who would manage their financial matters and inheritance should both parents die or become incapacitated?

Guardian Guidance

     Parents have the right, and the obligation, to appoint legal guardians (or back-up parents) of their choosing to rear minor children to adulthood. (Note that even if parents are separated or divorced, the surviving biological parent will continue to be the children’s legal guardian unless deemed unfit by a court.)
While every situation is different, here are some general guidelines to keep in mind when selecting guardians:

• Select guardians with similar faith, values and life priorities; and who already have an established positive relationship with the children;
• When selecting a married family member, appoint the family member only, not their spouse, in case the family member predeceases or the couple divorces;
• Provide for the compensation of the guardians, or at least sufficient assets from the children’s inheritance to cover all expenses incurred on their behalf; and
• Obtain permission from selected guardians before appointing them in legal documents.

Fiduciary Fulfillment

     A fiduciary is a person or an institution legally responsible for the financial affairs of another. Fiduciaries are held to the highest standards of care and loyalty in this role. An appointed fiduciary manages the financial matters of incapacitated individuals, and any inheritance left upon death.
     By default, if parents make no legal plans, the selection of a fiduciary to handle the children’s financial matters will be made by a probate court judge. On the other hand, parents who choose to make these decisions in advance have basically three legal options.
      Option #1: Appoint trusted family members or friends who know the children well. Family members may not charge much, if anything, to serve as fiduciaries. But they may lack the financial expertise to manage large sums of money, and may be busy with their own responsibilities.
     Option #2: Choose a professional fiduciary, such as an institution (e.g., a corporate personal representative/trustee). While a professional may not know the children well, this could be an advantage when it comes to protecting and managing their inheritance. Professionals also typically charge fees, but their financial savvy may prove the better value.
     Option #3: Combine Options #1 and #2 for the best of both worlds. The family member can supervise, without responsibility for investments, accounting and tax details. Plus, the professional can play the heavy, if needed, without jeopardizing family relationships.