If you have overheard any estate planning discussions, you have likely heard the words “guardian” or “trustee.” In estate planning, deciding who will ultimately be tasked with caring for your minor child or managing funds for their benefit is an important decision that requires consideration of many factors.
Although there is no substitute for you as a parent, a guardian is someone who steps in when you pass away to assume your parental role and raise your minor child through legal adulthood. Conversely, a trustee manages the financial legacy you leave behind for your minor child. As a parent, you need to consider the skills and characteristics each role requires to ensure that you nominate the right people for the benefit of your child and their inheritance.
Who Makes a Good Guardian?
When choosing a guardian, the top consideration is who will love and raise your child like you would. Keep in mind the potential guardian’s religious beliefs, parenting style, interest in extracurricular activities, energy level, and whether they have children. You may want to consider where the individual lives and whether they have the capacity to provide daily love, care, and support for your child.
Who Makes a Good Trustee?
While the guardian you choose may be great at caring for your children, they may not be great at managing money. For this reason, it may make sense to place the financial management of your child’s funds in someone else’s hands. The person responsible for managing your child’s inheritance is the successor trustee or trustee. Not surprisingly, when choosing a trustee, the most important characteristic is that they manage finances well. However, they often do not need specialized knowledge or training. This individual can seek assistance from financial professionals should the need arise. The trustee must be able to manage the funds in accordance with your intent and pursuant to the trust’s instructions.
Consider whether your potential trustee will agree and comply with the way you have structured the payout plan for your child’s inheritance (for example, giving your child a portion of their inheritance at different ages). If they do not agree with your wishes, it may be difficult for them to enforce them. Likewise, if you want to give your successor trustee discretion in managing funds and distributing inheritances rather than setting forth ages at which distributions are to be made, you should ensure that your trustee will use their discretion in alignment with your intent. In short, you want to choose a trustee to manage your child’s inheritance who will act in your minor child’s best interest within the limits you have set forth in your estate plan documents.
Should They Be Different People or the Same?
Whether you select the same person to act as guardian for your minor child and successor trustee for your child’s inheritance will likely be based on the ability and capacity of the specific person. Some people may have the skills required to manage both roles effectively, which can simplify certain aspects of the process because the guardian will not have to go to someone else to request distributions to care for your minor child.
On the other hand, not every person can do both jobs. With two different people serving in these roles, you can ensure that you have the right person for each job if one person is not ideal for both. Also, some individuals choose to designate a guardian from one spouse’s family and a trustee from the other spouse’s family to establish a system of checks and balances. This approach ensures that both sides of the child’s family are equally involved and each individual remains accountable. If you choose two different people for the roles of guardian and trustee, consider how the two get along, as they will likely have to work together and coordinate frequently while your child is under the age of majority.
Seek Help to Make Your Decision
While the estate planning process can be daunting, it does not have to be. Contact a knowledgeable estate planning attorney to help guide you through this process. We can explain your options and help you determine the best plan that will follow your wishes while meeting your family’s needs.
