Thoughts on Choosing a Guardian for Your Children

Most parents do not like to contemplate the possibility that they may not be able to care for their children, either because of their death or significant disability. As unpleasant as the thoughts may be, though, there are several reasons why parents must think through and plan for this situation.

What Happens if You Fail to Make a Plan?

In the event that you pass away or become disabled such that you are unable to care for your children, someone will be required to step in and take over their care. If you do not have a properly created and executed guardianship plan, then the courts will make these decisions for you. The courts will make decisions over two areas of responsibility: your children's physical care, and the management of their finances. The same person may become responsible for both areas, but the court also may name different people for each role.

Obviously, children need to have an adult to care for them until they're able to care for themselves. If your spouse and/or children's other parent survives you, he or she will almost always be assigned as guardian over their physical care. If they don't, the court will generally look next to your closest relatives. Blood relatives that are willing to take on the care of your children will be preferred over non-relatives, regardless of how you might feel about them or your potential preference for a non-relative over a relative.

Children also can't be responsible for their own financial matters before age 18, so the court will also have to appoint an adult to manage their finances and any inheritance they may have received from you. More than just appointing a financial guardian, though, the court will want to monitor the actions of the financial guardian it appoints to be sure that the guardian is acting prudently and in the children's best financial interests. The court will impose requirements on the financial guardian that will greatly add to the expense of the guardianship. For example, they may be required to post an annual bond, get prior court approval for certain major financial transactions such as investment decisions, sale of assets, tuition expenses and more, and prepare and submit annual reports. All of this added work can cost thousands of dollars, which will come from the inheritance you left for your children.

By failing to have a guardianship plan in place, you have transferred power over your children's future to someone who doesn't know you or your children and added significantly to the costs and effort required to care for them. Avoiding that result is easy, though. Here is how to prevent this situation from happening:

How Should I Choose as a Guardian?

When choosing a guardian for your children, there are many factors to consider. Obviously, the most important factor to consider is the potential guardian's ability and willingness to love and care for your children. You should try to choose someone that has a similar moral value structure as you and that has a similar view of religion and education. Depending on the age of your children, you will want to nominate someone that has the time to devote to raising children along with the required energy and patient temperament. Financially, you will want to nominate someone that has good financial management skills and that has sufficient resources to care for themselves and others. Ideally, you will have left an inheritance for your children from life insurance proceeds, savings, and other assets so that the guardian will not have to absorb the expense of caring for your children, but their financial skills will come into play as they take over guardianship responsibilities so you should be confident of their financial abilities.

Once you've decided on a potential guardian, it is crucial that you discuss this with them in advance of naming them. While most friends and relatives will feel honored to hear that you would like to name them as guardian of your children, it is important that they consider and agree to accept the responsibility and all of the potential hard work involved should they be required to act on their nomination. Accepting responsibility for someone else's children is a huge responsibility, which should not be taken lightly.

What Do I Do After I Choose a Guardian?

The easiest (and most common) way to nominate Guardians is within a properly drafted and executed will. To handle your children's financial matters, and to prevent the costly and burdensome financial oversight of the courts mentioned above, you should create a trust for your children that will hold your assets for their benefit. The documentation of the trust will allow you to name a trustee of your choosing that will have the ability to make investments, expenditures and other financial decisions for your children's benefit. Having a trust will remove your assets from the courts oversight and the potential requirements of a bond, annual reporting, and decision approvals. Another benefit of a trust is that you can designate the age at which your children will take over control of the trust assets. In Virginia, absent a trust that specifies otherwise, your children will take a lump sum payout of their inheritance on their eighteenth birthday. Most parents would agree that 18 year olds are not ready to maturely and prudently manage a large sum of money. With a trust, you can extend that time period to a later date, such as their twenty-fifth birthday, when they would be better able to manage their money.

You can create a trust for your children as part of your will that becomes effective upon your death (called a testamentary trust) or you can create a trust now that will last after your death. You can also create a special trust that is set up to own just your life insurance proceeds (called an Irrevocable Life Insurance Trust or ILIT) and manage its proceeds after your death. Your attorney can explain the benefits of different trusts based on your unique situation.

The important thing is to take action now to set up a plan to care for your children if disaster should strike. Your children, and their future, are counting on you.