Picking a guardian for your child
By Pat Curry • Bankrate.com

Everyone knows they should have a will, and most people know that they need to name an executor to make sure their belongings are properly distributed.

However, many people forget to make proper provisions for their most precious possessions -- their children. By all means, make out a will and pick an executor. If you have minor children, you also need to name a guardian.

It's critical because if you don't, the court will do the job for you. Although no one plans on an accidental death, parents sometimes die unexpectedly, leaving behind children who will need someone to take care of them until they turn 18.

Ralph Engel has seen it happen. An estate attorney and partner with the law firm of Sonnenschein Nath & Rosenthal in New York City, he had clients who died in a hotel fire. They didn't have a will and left two children behind.

The family "went to war over the kids," he says.

"There are legal and financial ramifications," he says. "This is far harder than being named an executor or a trustee. It's the most difficult decision people make in their estate planning."

Typically, the discussion is limited to asking if a person is willing to be named, but that's just not enough, Engel says. It's a conversation that should also include pertinent financial details such as life insurance and retirement funds for which the children are named beneficiaries, savings accounts, investments, property and any other assets that the guardian can rely on to help care for the child.

The guardian's role
From the legal perspective, a guardian is someone who is acting in another person's interest. He takes over where the parent left off, making decisions about the child's upbringing -- where he goes to school, when and who he can date, medical care and everything else, right down to revoking TV privileges if he doesn't take out the trash.

It means a change in housing for someone, whether it's the child or the guardian and perhaps moving to a new community at a time of great personal tragedy.

The court also will require the guardian to report on the child's condition, usually at least once a year. The judge is supposed to review the reports. The report will cover such basics as where the child is living, his physical, social and emotional health, and how he's doing in school and extracurricular activities.

Most often, parents turn to family members to choose a guardian, and generally speaking, the law stays out of those kinds of personal decisions. In North Carolina, for example, the court assumes that the parent has acted in his child's best interest in naming a guardian, and that recommendation is taken quite seriously. It's still just a recommendation, though. The court has the final say.

There are some legal limitations on who you can choose for a guardian, depending on the state where you live. In Illinois, guardians must be at least 18 years old and a resident of the United States. They can't have a felony conviction, they must be of sound mind and they have to prove they're capable of providing "an active and suitable program of guardianship."

It also can get a bit tricky for single parents who don't want their ex or the child's other biological parent to assume the primary parenting responsibilities. Unless the other parent has willfully abandoned the child or severed his parental rights, he is the natural guardian.

As agonizing a decision as choosing a guardian may be, it's actually a good idea to have at least one other person named as a backup.

"What if you don't like the guardian's spouse? What if they get divorced?" says Marguerite Munson Lentz, an estate and trusts attorney with Honigman Miller Schwartz and Cohn LLP in Detroit.

Some children have veto power
Once your children are of a certain age, they may have veto power over their parents' wishes. Michigan and Illinois give children 14 and older some veto power over their parents' choice.

"They can say, 'No, I don't want to live with Aunt Suzie,'" Munson Lentz says. "The court recognizes a child is old enough to make some decisions."

Once a guardian has agreed to serve, it's important for both parents to name that same person in their wills.

Otherwise, "the kids wind up in a war in the middle," Engel says, "and while the court is trying to figure it out, who takes care of the kids?"

Often, parents will designate one person to be 'guardian of the person' and another who is 'guardian of the property' or 'guardian of the estate' to handle the money for the child.

The guardian of the property is responsible for paying the expenses of caring for the child. He'll probably have to post a bond that would pay the estate if the guardian misuses the funds. It's his job to look into state and federal benefits that the child might be eligible to receive, including Social Security and Medicaid. He will have to present an annual report to the court on how the money was spent.

Both Engel and Munson Lentz strongly recommend against naming a guardian of the property because guardianship ends at age 18, a time when many young people aren't quite ready to handle what to them may be a large sum of money. Plus, guardians often are restricted by the courts as to what they can do with a ward's money and may have to ask the court's permission to spend it on their behalf.

"There are courts that won't approve more than one semester of school at a time," Engel says. "If the children are at a higher socioeconomic level than the people who work at the court, things that the parents thought were commonplace, such as summer camp and private school, may seem outrageous to the court."

Instead, they recommend setting up a trust and appointing a trustee who can maintain control of the funds for as long as the parents wanted, such as when the child finishes college, gets married or is established in a career.

Whichever route a parent takes, the bottom line is that anyone who has children needs to take care of this. Munson Lentz says that selecting a guardian -- and making it official in a will -- is a lot like a fire insurance policy.

"You hope you'll never use it, but it's there as your backup," she says. "Fortunately, most kids manage to make it to 18 without their parents dying."