smart spending

Financial help with raising grandchildren

Planning for guardianship

Ideally, parents need to appoint guardians for their children as a practical estate planning measure, says Frank Armstrong III, founder and CEO of Investor Solutions in Coconut Grove, Fla.

"It's a matter of pure business contingency planning," he says. "We ask who will be guardian and whether they have accepted. Do they have money to support the children? Is there room for them in their house?"

If parents have not appointed a guardian, the courts will do so, he says, "and that may not be the best solution. It can be a very nasty, protracted legal battle."

A second consideration, Armstrong says, is making sure there will be enough funds to provide for the care of children in the event that the parents are no longer in the picture. Otherwise, he says, the appointed guardian may end up assuming unanticipated financial obligations such as medical care and schooling.

The cost of education can be an especially daunting expense for grandparents -- particularly since they may not be around by the time the child reaches college age, says Ana Maria Martinetti-Katz, a financial adviser at Investor Solutions. She recommends the following websites for help with planning for college costs:

  • fafsa.ed.gov
  • savingforcollege.com
  • scholarships.com
  • studentscholarshipsearch.com
  • ssa.gov/survivorplan/onyourown4.htm

Finally, King advises caretaker grandparents to revisit their estate plans to forestall the possibility of repeating the cycle.

"They should consider adjusting the succession plan," she says, "and also focus on a sustainability plan that can function beyond their lifespan -- including appointing another guardian."

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