What a task to think about all of the details of making sure your children have the best care in the event you pass away suddenly and unexpectedly. Even so, a recent article in TheStreet, titled "How to Give Away Your Kids,"says that it is a discussion you must have. Due to the complexity of this task, the article explains that some families with young children will be "frozen in place" without making a decision.
When drafting your will, you have the option to select two different guardians. You can have a guardian for your child or children and a guardian for the property or the estate. In fact, they can be the same person if you want, but need not be. Typically, people choose two different individuals because the one who cares for the children might not be the person you would want to handle their inheritance. The two-guardians approach may require separate and distinct skill sets.
To minimize the risk, some choose to keep these roles separate. The best way to do this is by creating a trust.
If both parents pass away, usually all or most of their estate will pass to their children. This would be best done via a trust if the children are minors. By setting up a trust, you can be very specific regarding how the funds can be used for your child's care and education. The guardian of your child's property can also be an institution—it need not be a person. And that guardian is not required to live with your child. For example, you could name an older 19-year-old daughter legal guardian of a 13-year-old, but the 13-year-old could live with her grandparents while the 19-year-old is away at college.
Requesting an individual to be a guardian and to potentially “expand” their family is a significant financial obligation. Leaving enough funds to provide for the care of your minor children is another tough task. Consequently, a lot of people spend considerable time figuring out the estimated cost of their financial objectives. Oftentimes, these people evaluate their life expectancies and try to come to an appropriate level of life insurance and savings. The smartest thing to do is to talk to your estate planning attorney once a year or so to contemplate any changes in your life and lifestyle.
Reference: TheStreet (July 28, 2014) "How to Give Away Your Kids"