Providing Financial Support to Guardians

Guardianship duties carry much responsibility. Fulfilling them comes with costs, both emotionally and financially.

A guardian may need to form or augment a personal relationship with your young child during a very difficult time. He or she may need to learn to navigate complex regulations affecting special-needs adults. Typical guardian duties also entail providing regular reports and accounting to the court.

You selected your guardian because you were confident that he or she could meet the position's personal and legal requirements. In asking so much of your guardian, you must ensure that the individual has the wherewithal to meet the future financial needs of your children or special-needs relatives.

Children's continuing costs

Children's needs are varied and ongoing. There are general living expenses, such as food, clothing, allowances, entertainment, and automobile purchase and maintenance.

Educational costs include such things as private elementary or high school fees, college and graduate school expenses, and the associated books and supplies at all educational levels.

And, don't forget about special things you want to be part of your child's life. This could be attendance each summer at a particular camp or annual trips to visit close friends and relatives. If your child is a budding Olympic swimmer, you'll want to include costs for training and coaching.

Special needs, special planning

Considerations for special-needs relatives are more complicated. Resources must usually last the rest of the ward’s life, which could be decades.

Health challenges can result in large and recurring medical bills. Careful planning is necessary to ensure that you don’t unintentionally disqualify your relative from government assistance such as Social Security disability payments and Medicare eligibility.

Mapping a secure financial route

Financial planners can help determine the future costs of these obligations and calculate whether your current assets are sufficient and liquid enough to cover them. Additional life insurance may be necessary to fill any gaps, or we may find that you are over-insured.

We also look at the mechanisms in place to transfer these assets to be used for the benefit of your children. Financial planners can work with your attorney, who drafts the necessary documents to fulfill your wishes. Some important considerations include:

A trust to hold your assets

Don't leave assets outright to the guardian. That money would be legally his or hers, to do with what he or she wants. Instead, name the guardian as the trustee of a trust established for the benefit of your children. The trustee has a legal obligation to stick with the terms of the trust and can be held legally accountable if he doesn’t.

A corporate trustee

This option provides another level of accountability. It also takes care of the administrative burden associated with trust reporting and taxation. While the cost is usually higher than using a person as a trustee, it can be well worth it.

Beneficiary designations

Beneficiary forms override what is in your will. Make sure that your trust is named as the beneficiary instead of your child or other relative. If a person with special needs receives an inheritance outright, this could disqualify him or her from needs-based community or government benefits.

Navigating the complex world of guardianship types, cost calculations and trust construction can be overwhelming. But, with the help of a qualified financial planner, the process can ensure the needs of your loved ones are met.