Guardians do not Have to be Millionaires

Thanks for checking back. Now, continuing our series on the Six Common Mistakes People Make When Naming Guardians for Their Children, here is Common Mistake #3:

You’ve put too much emphasis on a person’s financial savvy when deciding who should raise your children. Your guardians do not have to (and often should not) be the financial decision makers for your kids.

When sitting down to name a guardian for your children, your first thoughts should not be about bank accounts and money smarts. Guardians do not have to be millionaires with an indoor swimming pool and an MBA. What makes a great guardian is having a loving and trustworthy nature, and sharing your core values.

Not Enough Money in the Bank? 

Many parents worry that if they should pass away, there would not be enough money left behind for their children’s care. Though it is an understandable problem, it can be taken care of with life insurance, and it should not affect your choice of guardian. While you may not want to burden your children’s guardian financially (thus designating someone who already has a substantial amount of money), you should take that out of the equation, provide assets or insurance for the care of your children, and then just think about who will do the best job of loving and guiding them in your absence. A guardian is there to provide for the child’s emotional and physical well being, we can help you choose another person who will be responsible for taking care of the money you leave.

Designate a Trustee

Sometimes the problem isn’t how much money you leave; it is about how the money is being handled. When deciding on a guardian for your children, remember they do not have to be financial decision makers for the children, and sometimes they shouldn’t be.

Let’s say you and your spouse pass away suddenly, leaving your children behind with enough money to allow them to get through college. The guardian you chose, however, is not very responsible with money, making poor investment decisions and even worse spending decisions. This leaves your children (and their guardian) in a financial bind in the future. Fortunately, this problem can be avoided by designating a trustee for the children’s inheritance. The trustee would be in charge of your children’s finances. The guardian you chose can also act in this capacity, but sometimes it is best to have two separate people. Having to raise your children and look after their finances might not be a good fit for any one person.

Choose Someone for the Right Reasons

Living in a big house and having a plush bedroom might sound appealing, but if that means doing it with someone who won’t look after your kids the way you would, then don’t even consider it. Leave your children to someone who loves them and will raise them the way that you would want and if it’s the right thing, then let someone else help make the financial decisions. Everyone will benefit from your thoughtful planning.