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Often our younger Clients don’t understand the importance of having an estate plan. Many younger people don’t need estate planning for asset transfer but they do need estate planning that gives legally binding instructions for what will happen to their children and who will be responsible for taking care of them.
Who should be the guardian for your children?
We believe the most important question that can be answered by parents with minor children in the estate planning process is who will be responsible for their children if they’re not around? The answer to this question might be one of the most important decisions you will ever make in your children’s lives.
The question that both spouses will want to ask is who would be willing and able to raise our children in a manner we think fits the value systems we want for our children. We suggest that you first answer this question independently and then share your choice with your spouse.
If both spouses don’t have the same answer, then it’s important that they have a full and open discussion about care for their children. You want to discuss your values and why you think the person you choose will raise your children with the values you think are important.
If you disagree, you must listen closely to the opinions and ideas of your spouse. This conversation often allows parents to have an important discussion about the values you want for your children. We often go through life assuming that our spouse wants the same thing for our children as we do. We’ve seen many couples have vigorous conversations around values when we bring up the issue of who would be a good guardian for their children.
After you come to an agreement about who you would like to have as a guardian for your children, you need to ask that person if they’re willing to serve as the guardian for your child. It’s crucial that they agree to do so.
People who are appointed guardians don’t have to serve. If you appoint someone guardian and they decide not to serve, then the court will decide who will raise your children. Most of us don’t want that to happen.
Trustee Issues
The second decision you have to make about your minor children and estate planning is who will be responsible for the money. Many people think that whoever they choose for their guardian also has to be responsible for the minor children’s money.
We often suggest that just the opposite occur. We think that in many circumstances the person you want to take care of your children may not be the best person to manage the money you have put aside for them. For this reason, we often see the manager of the money be a different person or institution than the person responsible for raising the children.
You will want to also decide whether the person handling the money is a trust company or an individual. There are good and bad points about both. We suggest that you have a conversation with your Stage 2 Advisor about the specifics of your own situation.
Funding for Children
It’s important that you think about the cost of raising your children. Potential guardians are often hesitant about taking the responsibility for your children because they don’t know how they could afford the cost of raising them.
We believe it’s important that you have cash that is set aside or could be set aside if you and your spouse are not around to provide for your minor children. A good solution for this problem is the purchase of term life insurance. We suggest looking at a 10 or 15 year term policy to provide funds if you and your spouse are no longer around to provide for your children.
Planning for guardian and trustee arrangements is a complicated issue. We suggest that you have a conversation with one of our Advisors to help. If you have grandchildren, we suggest you ask your children what they have done to provide for their own children. If they haven’t dealt with this issue, please strongly encourage them to do so.
If you would like more information or support from our firm, please visit us online or e-mail us and your Stage 2 Associate will get back to you.
With Warm Regards,
Stage 2 Planning Partners
Josh Patrick © 2006
Securities and Investment Advisory Services offered through NFP Securities, Inc., A Broker/Dealer, Member NASD/SIPC and a Federally Registered Investment Advisor.
Stage 2 Planning Partners is an affiliate of National Financial Partners Corp., The parent company of NFP Securities, Inc. Representatives listed on this website are currently registered to conduct securities business in the following states: AZ, CO, CT, FL, IL, IN, MA, MT, NC, NH, NY, PA, RI, VA, VT, WA
NFP Securities is not affiliated with Harris- Murray
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