As a young couple diligently doing your estate planning, you have a life insurance policy in place for your children. You’re in accord on who should rear the kids if the unimaginable occurs, and they’ve agreed to step up. You’ve covered all the bases, right?
Maybe not. Sometimes it’s more prudent to select a fiduciary guardian or conservator to look after the children’s financial needs. Below are some things to ponder when making these all-important decisions about your children’s future.
Not everyone is financially savvy
The person(s) you trust to wipe your children’s tears, tuck them in at night and coach their Little League games may be woefully unprepared to manage the proceeds of a large life insurance policy. That doesn’t make them bad people. We all have different strengths and weaknesses.
Financial mismanagement could derail your careful planning
When you did your estate planning, you calculated the amount of the policy based on your children’s anticipated needs. One bad investment could imperil their financial future.
Access to significant resources affects people differently
You may think you know someone, but when money enters the picture, people can change. Unfettered access to your children’s inheritance could lead to skimming funds to enhance the adult’s lifestyle or diverting money to cover their biological children’s expenses.
Separate guardians allow for fiscal oversight
You should implicitly trust the guardian you appoint to care for your children. But there is no harm in appointing a second individual to manage their inheritance. That person might work in the finance industry or just have experience with personal investment and money management.
Explore all your estate planning options
Your family is unique – and your estate plan can be as well. Learn more about guardianships to choose the best options to provide for your loved ones.