Will - Guardianship question

[jeromedawg]

Hey all

For those of you who have done your wills/trusts, I had a question about guardianship and how you might choose your temporary, 1st successor, 2nd successor and 3rd successor (or more) guardians.

We are still working on ours but tentatively we have put a friend-couple who we trust and who live down the street from us as our temporary guardians for our kids. For our 1st successor, it's my brother and wife. 2nd successor local friends of ours. 3rd successor local friends of ours. Our attorney was suggesting that we might want to not specify both my brother and wife and only my brother in the case that they separate or something and where our kids would be left with my sister-in-law instead of my brother. I wasn't really understanding the full ramifications of specifying it one way or the other. And the same goes for our friends - would we only want to specify *either* the husband or wife vs both?

The other thing I don't quite understand is the successorship - so if both my wife and I pass on and my brother assumes guardianship but then 5 years later he passes on, do our kids go to the next successor guardian? Or is it supposed to work in the sense that both my wife and I have passed on AND my brother has passed on, so our kids will go to the 2nd successor guardian?

There's also a preference about us desiring that the couple be married at the time of assuming guardianship... but what about if they divorce or one passes on *during* guardianship?

We're working with an attorney-friend and had our first meeting with her today but it's easy to get lost in too much lawyer-speak, and I feel like having real-world examples from others might give us some better clarification.

[slappy]

We were given the same guidance re: naming only one person. We have my step brother named. The idea is that the kids would go to him and his wife if something happened to us. However, if they divorced prior to/during/after the guardianship, it is our wish that the kids stay with him. We also don't want a custody battle between them for our kids. It's terrible to think about, but there is a lot of life insurance money if we both pass at the same time. There are people who would fight for custody of the kids just for the purposes of getting the money.

My understanding of the successor is that it goes for if the first person is unable or unwilling. So if we both pass, and my step brother is unable or unwilling to take the kids for whatever reason, they would go to the successor guardian. I believe once he takes guardianship, he would need to make his own provisions for what would happen to the kids if something then happened to him.

I've never heard of any type of preference towards married people. It's your decision who you want to take your kids if something happens to you. If you prefer a married couple, I guess that would be your own decision to make. We chose based on who we thought would have the time/energy/desire to raise the kids, as well as whose parenting style we admire.

[GizmoTX]

While you should also leave enough funds for your guardian to properly care for your kids, you don't need or necessarily want to give them financial control over your entire estate. Often the person best suited to parent your kids is not financially capable to manage what to them is a large sum of money. You can name a different set of successor trustees from the guardians.

[slappy]

While you should also leave enough funds for your guardian to properly care for your kids, you don't need or necessarily want to give them financial control over your entire estate. Often the person best suited to parent your kids is not financially capable to manage what to them is a large sum of money. You can name a different set of successor trustees from the guardians.

Yes, that's what we did.

[jeromedawg]

We were given the same guidance re: naming only one person. We have my step brother named. The idea is that the kids would go to him and his wife if something happened to us. However, if they divorced prior to/during/after the guardianship, it is our wish that the kids stay with him. We also don't want a custody battle between them for our kids. It's terrible to think about, but there is a lot of life insurance money if we both pass at the same time. There are people who would fight for custody of the kids just for the purposes of getting the money.

My understanding of the successor is that it goes for if the first person is unable or unwilling. So if we both pass, and my step brother is unable or unwilling to take the kids for whatever reason, they would go to the successor guardian. I believe once he takes guardianship, he would need to make his own provisions for what would happen to the kids if something then happened to him.

I've never heard of any type of preference towards married people. It's your decision who you want to take your kids if something happens to you. If you prefer a married couple, I guess that would be your own decision to make. We chose based on who we thought would have the time/energy/desire to raise the kids, as well as whose parenting style we admire.

Thanks! This is generally how my wife understood it but I was confused. So that makes more sense now! So would that same rule, regarding getting divorced prior to/during/after guardianship, generally apply to the successor guardians to avoid potential custody battles in the same manner? I'm curious, namely in the case of those who are not relatives/blood-relatives - if we name our friends as 2nd successor trustees would it not be a bad idea to actually just choose *one* of them rather than specifying both the husband and wife?

While you should also leave enough funds for your guardian to properly care for your kids, you don't need or necessarily want to give them financial control over your entire estate. Often the person best suited to parent your kids is not financially capable to manage what to them is a large sum of money. You can name a different set of successor trustees from the guardians.

This makes sense - sort of a check & balance, right? I named my second oldest brother as both the guardian and trustee but this is because I feel pretty confident trusting financial decisions to him on our kids' behalves. And I think he would hold-up and honor our wishes as far as what we want for the kids and where the money should go. My oldest brother is the secondary trustee so he would kind of be a check and balance for my friends who would be guardians... that said, do successor trustees pretty much work the same way as successor guardians where if the 1st successor trustee has to either not be around or has to be unable to manage the estate in order for the 2nd successor trustee to take over (also, if capable)?

[cchrissyy]

It's terrible to think about, but there is a lot of life insurance money if we both pass at the same time. There are people who would fight for custody of the kids just for the purposes of getting the money.

This isn't a given.  You can put the life insurance money and all your other assets in a trust for the kids and have that trust managed by anybody you want, an entirely separate question from you has custody of the children.
Also, in my case, I don't want kids getting inheritance too young, so even if I did have the unique case of wanting custody to go to the same person who controls the kids' assets, I would still set up a trust in order to not give the kids access to their money until after college.

[slappy]

It's terrible to think about, but there is a lot of life insurance money if we both pass at the same time. There are people who would fight for custody of the kids just for the purposes of getting the money.

This isn't a given.  You can put the life insurance money and all your other assets in a trust for the kids and have that trust managed by anybody you want, an entirely separate question from you has custody of the children.
Also, in my case, I don't want kids getting inheritance too young, so even if I did have the unique case of wanting custody to go to the same person who controls the kids' assets, I would still set up a trust in order to not give the kids access to their money until after college.

This seems to be the part that we are missing in our plan. We named someone to manage the money and someone to take the kids, but we never set up a trust or anything like that.

[jeromedawg]

It's terrible to think about, but there is a lot of life insurance money if we both pass at the same time. There are people who would fight for custody of the kids just for the purposes of getting the money.

This isn't a given.  You can put the life insurance money and all your other assets in a trust for the kids and have that trust managed by anybody you want, an entirely separate question from you has custody of the children.
Also, in my case, I don't want kids getting inheritance too young, so even if I did have the unique case of wanting custody to go to the same person who controls the kids' assets, I would still set up a trust in order to not give the kids access to their money until after college.

Another good point about when to give the kids access to the money. I think 25 is the 'recommended' number for most people, according to my attorney. I think we'll probably go with that number.

[GizmoTX]

You don't need to set up a trust now -- your will can do that if & when it's necessary. However, we set one up at age 1 to gift money yearly & for appreciation outside of the kiddie tax.

The trust should be worded so that the trustee can disburse funds for the care, health, & support of the child(ren), not just education -- you don't want limits on any special circumstances that a child may need. We worded it so that our child could receive up to 50% of any remainder after a 4-year diploma, another 25% at age 30, & any remainder at age 35.

[slappy]

You don't need to set up a trust now -- your will can do that if & when it's necessary. However, we set one up at age 1 to gift money yearly & for appreciation outside of the kiddie tax.

The trust should be worded so that the trustee can disburse funds for the care, health, & support of the child(ren), not just education -- you don't want limits on any special circumstances that a child may need. We worded it so that our child could receive up to 50% of any remainder after a 4-year diploma, another 25% at age 30, & any remainder at age 35.

Thank you for this information! I like the way you worded it!

[jeromedawg]

You don't need to set up a trust now -- your will can do that if & when it's necessary. However, we set one up at age 1 to gift money yearly & for appreciation outside of the kiddie tax.

The trust should be worded so that the trustee can disburse funds for the care, health, & support of the child(ren), not just education -- you don't want limits on any special circumstances that a child may need. We worded it so that our child could receive up to 50% of any remainder after a 4-year diploma, another 25% at age 30, & any remainder at age 35.

Interesting on the custom disbursement plan - our attorney is charging extra if we want to do that outside of what the legal plan I have includes via ARAG but that seems like a good idea and possibly worth paying extra for.

What's the yearly gift you're referring to? Is that the $14k? How does that work in terms of gifting money into the trust so that it's avoiding taxation?

[jeromedawg]

Something else that came to mind just now, adding to the confusion, but what happens if I am listed as successor guardian for my brother's kids in the context of our own will & trust? Do we have to make a provision for this in our will/trust? Or do we just add the provisions *after* we've assumed guardianship of their kids?

[GizmoTX]

Interesting on the custom disbursement plan - our attorney is charging extra if we want to do that outside of what the legal plan I have includes via ARAG but that seems like a good idea and possibly worth paying extra for.

What's the yearly gift you're referring to? Is that the $14k? How does that work in terms of gifting money into the trust so that it's avoiding taxation?

A trust should be worded so that disbursement 'may' be made, not 'shall' be made; you want discretion, not a mandatory requirement regardless of the circumstances.

Yes, staying under the yearly gift exclusion amount avoids gift tax to the donor. The trust itself pays its own income tax, but in our case at a much lower rate than kiddie taxed earnings would have been.

I think if you ever actually become a guardian for other kids, then you amend your will if you want to leave them anything of yours, i.e. beyond what their parents provided for.

[Dee18]

I heard an expert speak on this topic a few years ago.  She said some states do not honor parental choices.  I was shocked to find out that in my state guardianship is treated solely as a "best interests of the child decision" and the courts can (and sometimes do) ignore parental preferences.  All family law issues are governed by state law, but this is one where states differ dramatically.  Find out what the law is in your state when you meet with an attorney.  Once I had this knowledge, I followed the speaker's advice and went ahead and discussed my preference (for my child to live with a dear friend who happened to be single and male, rather than with my sister, who happened to be married) with my parents.  I made sure they understood my reasoning and would explain to any court why the friend was the best choice.  Happily I have watched my daughter turn 18+ so the issue is moot (although I still have a financial trust established).

[jeromedawg]

For anyone who has designated their married sibling as a successor guardian, do you think it's a bit weird or off-base to designate the sibling-in-law (their spouse) as the secondary/alternate successor guardian? This would avoid legal custody issues in the event of a divorce of course, but it could still be awkward if the sibling-in-law is estranged via divorce/etc and she accepts the secondary successor guardianship in the case that my brother either doesn't want to (unlikely) or is unable or has passed. On the flip-side, I would lean towards trusting my SIL in the event that my brother passes on or is unable to care for my kids in the context of them still having been married.

[GizmoTX]

If your brother is unable to care for your kids, I doubt your SIL will be interested in adding that burden if they're still married. Just something to think about. She will care for your kids if your brother does. I'd pick a different secondary & avoid the 'if married' issue.

[jeromedawg]

If your brother is unable to care for your kids, I doubt your SIL will be interested in adding that burden if they're still married. Just something to think about. She will care for your kids if your brother does. I'd pick a different secondary & avoid the 'if married' issue.

Doesn't she have the right to waive or decline their rights of guardianship at the time?

[GizmoTX]

Yes, but now you've used 2 of your typically 3 slots on one couple who are each likely to make the same go/no-go decision. If you are concerned about your SIL possibly being offended, discuss your reasoning now with them, and you should get their permission anyway.

[cchrissyy]

I don't think you need to over-complicate this with "what if". Just, make your will, and revise if the circumstances seriously change.

[jeromedawg]

Thanks all, so we'll just stick with listing one person per guardianship and different trustees as well.

BTW: side question but for trusts, once we've established ours, are we supposed to change all of our accounts (bank, investment, etc) to the name of the trust? Or is it OK to keep the accounts in our individual names?

[GizmoTX]

If you're doing a living trust, yes, it's better to fund it with your major assets placed in the trust before you die or become incapacitated. But if you mean a testamentary trust created by the event of parental death for the benefit of minor children, no.

[cchrissyy]

I recently saw a lawyer about this, who said he will put the large assets in the name of the living trust, while smaller accounts it was good to do that but also OK to simply name the trust as the beneficiary (where previously the kids were named beneficiaries).
He will handle re-titling the large assets but give me instructions both ways to do the bank/retirement/insurance accounts myself.