Should the Same Person Who is Raising My Children Also be in Charge of the Financial Assets?Share this post
Financial Assets-Who Should Be in Charge?
Sometimes the people who are the most nurturing are not necessarily the best at handling money. Although the person you name as Guardian of your minor children can also serve as Trustee of your trust that may not be the best solution.
It’s easy to see that filling the dual role of Guardian and Trustee presents the potential for a conflict of interest. For example, imagine you leave your four children to your sister as guardian, and you also make her the trustee of your children’s trust. Would it be reasonable for her to use $100,000 from the trust to add two bedrooms and a bath to her home? Many people would say that is reasonable. But what if she wants to use $750,000 from the kids’ trust to buy a larger home when her current home is valued at $300,000? In that case, it might be good to have a second opinion.
A Guardian for the Children and a Trustee for Managing Financial Assets
These types of scenarios can be avoided when you appoint one person to raise the children, and another to manage the finances. When the Guardian needs funds to help take care of your children, he or she simply contacts the Trustee, and explains the need.
But since the trustee has a measure of discretion in these matters, it’s also important to give clear guidance to the trustee so that your children are cared for in the way you want them to be. Some things to consider for the trustee instructions:
- Can my guardian expand the size of their current house (or buy a new house) in order to house my children?
- Can my guardian buy new appliances (such as bigger washers and dryers)?
- Can my guardian use the funds in the trust to pay for private school?
- Can my guardian use some of the funds to benefit the guardian’s own children so that there isn’t a perception of “special treatment” that will cause resentment between my children and the guardian’s children?
- Can money from the trust be used to take the whole family (including the guardian’s children and mine) on vacation?
- Do I want the trustee to generally be conservative or liberal when allocating funds to the guardian to care for my children?