Every parent wants to make sure that their child’s future is secure – even if they aren’t around. That’s why many new parents take the time to get their estate plans together, which includes naming a future guardian for their child in case something happens to both of them.
When you’re making your selection, however, it may be wisest to consider separating the fiduciary guardianship from the physical guardianship in order to best meet your child’s needs.
Why consider two different people to handle the finances and custody?
Many people designate the same person to handle all the guardianship duties – both the physical care of the children and their financial estate. However, that’s not always the best course of action for the following reasons:
- The person you choose to raise your child in your stead may be an excellent parent – but terrible with money. There’s nothing wrong in acknowledging, for example, that you think your sister would be a wonderful parent, but she’s simply not financially savvy.
- The money you leave your child through your estate may be hard to manage. If you anticipate leaving behind a nest egg through insurance proceeds and property, you want someone to invest that money wisely and help it grow. Choosing a firm or someone with great business acumen could accomplish your goals.
- You protect your children from financial abuse. Money can tempt a lot of people, and it isn’t unheard of for a guardian to dip into their ward’s nest egg to support a failing business, pay off a major debt or get them through a crisis. By separating physical guardianship from the financial, you eliminate that possibility.
Whatever you decide to do, make sure that you fully discuss your options. There are a lot of estate planning tools for you to explore.