You have been asked to be the guardian of the children of one of your siblings or a close family friend in the event of that person’s incapacity or death. You are flattered that someone would trust his or her children to you. Your first inclination in such instance is to accept. However, there are three key items that you should consider before you take on this important role.
Family Compatibility. If the kids are going to move in with you, how well do you and your own kids get along with them? Are family values similar? Since they would be part of your family, you probably want to treat them the same as your own kids. You have done a good job raising your own kids. That’s likely why you were chosen.
Are your religious views and the other parents’ religious views compatible? If you rarely go to church but the other parents go every Sunday, or if you are Christian and the other parents are Buddhists, what is expected of you?
You may expect your kids have to do their own laundry and have family chores, such as household cleaning or mowing the lawn. If the new additions to the family also do not have similar chores to do, you may have difficulty with your own kids. Or if the new additions to the family have never had chores, you may have difficulty with them.
With the additions to the family, it will result in less time being spent with your own children. Is that something you could live with? Or, if you are an empty nester with all your kids grown up, you may not want to jump into that role of parenting young children again.
Proper Appointment. If you are going to be appointed, you should want to be assured that the appointment has been made properly so that if the time comes, there are not going long court proceedings or fighting over who is going to take care of the kids.
In Michigan, you can avoid a court appointed guardianship hearing process by having the parents of minor children sign a proper appointment of guardian. All you would have to do in the event of the parents’ death or incapacity would be to take the appointment document down to the probate court, sign an acceptance of guardianship, and the court would then issue letters of guardianship authorizing you to take care of the kids. No muss, no fuss and no court hearings.
In the appointment document, there should be a contingent or back-up guardian. If things do not work out with the guardianship or you are otherwise unable to act as guardian, you could similarly avoid a long protracted court appointed guardianship process.
The appointment should be reviewed periodically, preferably annually. If not reviewed regularly, there could be unintended consequences. You may have been agreeable when you were only going to care for two extra kids, but then the parents had four more. Or you had no problem caring for two others when you only had one of your own; now you have four of your own. You may no longer be able to care for or want the added responsibility of additional household members.
Finances. You should know ahead of time whether you would be expected to shoulder all of the costs of raising the kids or if there will be additional funds available left by the parents for the care of their children. When there are other funds available, there are three important things to know before you accept the appointment: 1) Who is in charge of the finances; 2) How the funds are going to be managed; and 3) What the funds can be used for.
Are you expected to manage the children’s funds or is someone else? You may not want to keep track of another set of investments and bills. Keeping track of the kids may be enough additional responsibility you want to have. If someone else is going to be managing the funds, is it someone with whom you can work? You do not want it to be a major chore every time you needed funds.
Are the funds going to be set up in a trust or is there going to be a court appointed conservator to manage the children’s funds? With a trust, the trustee typically has the discretion and the authority to spend the trust funds as he or she sees fit. On the other hand, with a conservatorship, the conservator must report to the court on a regular basis and may have to make a request to the court to approve payment of bills in excess of $200.
I generally recommend that parents of minor children set up trusts for their minor children in order to avoid the court appointed conservatorship process. Not only is a trust more private and more flexible than the court appointed conservatorship process, the parents decide when the kids are in control of their funds, such as age 25 or 30 or even later. With a court appointed conservatorship, the kids are entitled to their entire inheritance at age 18 when they are legal adults and miraculously gain all the wisdom and insight of adulthood and can use their inheritance to go to the University of Corvette.
Once the funds are available, what can they be used for? If your house is too small for the additional family members, can you use the kids’ funds for their housing, such as to either put an addition on your home or to buy a larger home with more bedrooms? Basic needs, such a food and clothing, are one thing, but what about college funds? The more flexible the funds’ usage, the more likely the children’s needs will be met.
Statistics show that in the United States, 4% of children under the age of 18, do not live with either biological parent. So chances are one in 25 that a situation may arise in which a guardian will need to be appointed for a child. Whether you are accepting an appointment or doing the appointing, it is not something you want to take lightly.
By: Matthew M. Wallace, CPA, JD
Published edited June 3, 2012 in The Times Herald newspaper, Port Huron, Michigan as: What it takes to be a guardian