The Weekly Scenario: Should My Child’s Guardian Be In Charge of Financial Assets Too?
Question: Should the same person who is raising my children also be in charge of the financial assets?
Answer: Just because a person is the nurturing type, does not mean he or she is best at handling money. While the person you name as guardian of your children can also serve as trustee of your children’s trusts, that may not be the ideal solution or the best candidate. Serving in the dual role of guardian and trustee presents the potential for a conflict of interest. The temptation for a trustee to ‘blur the lines’ between the children’s necessary expenses and the guardian’s personal expenses is present.
This can be avoided when you appoint one person to raise the children and another to manage the finances. When the guardian needs funds to help take care of the children, he or she simply reaches out to the trustee and justifies the need. Since the trustee has a discretion in these matters, it’s important to give clear guidance to the trustee so that the children are cared for in the way you want them to be. However, it is not always necessary to be specific. In fact, most of the time, we rely on having faith that the people chosen for the roles will exercise good judgment.
That being said, at times it doesn’t hurt to give specific instructions. For example: can the guardian use portions of the funds to benefit the guardian’s own children; can the money from the trust be used to take the whole family (including the guardian’s children) on a vacation; can the guardian request funds from the trust to pay for private school?
Comment: I believe the most important decision is to pick high quality people for the roles. Even with the most specific instruction written into the legal document, the document can’t cover or foresee every situation that could arise.
As always, if you have any questions or would like to learn more, please contact Steve Shane at email@example.com or .
ABOUT STEVE SHANE
Steve Shane provides strategic counseling to clients in need of estate administration, charitable giving and business continuity planning while minimizing estate, gift, and generation-skipping transfer tax exposure. He offers legal guidance to clients on asset protection and the proper disposition of assets in accordance with the client’s objectives, while employing tax planning techniques such as the use of irrevocable trusts, life insurance planning, lifetime gifts and charitable trust. He is also experienced with drafting documents for business planning, the incorporation and application for exemption for Private Foundations and the administration of decedents’ estates.
ABOUT OFFIT KURMAN
Offit Kurman is one of the fastest-growing, full-service law firms in the mid-Atlantic region. With over 185 attorneys offering a comprehensive range of services in virtually every legal category, the firm is well positioned to meet the needs of dynamic businesses and the people who own and operate them. Our twelve offices serve individual and corporate clients along the I95 corridor in the Virginia, Washington, DC, Maryland, Delaware, Pennsylvania, New Jersey, and New York City regions. At Offit Kurman, we are our clients’ most trusted legal advisors, professionals who help maximize and protect business value and personal wealth. In every interaction, we consistently maintain our clients’ confidence by remaining focused on furthering their objectives and achieving their goals in an efficient manner. Trust, knowledge, confidence—in a partner, that’s perfect.
Find out why Offit Kurman is The Better Way to protect your business, your assets and your family by connecting via our Blog, Facebook, Twitter, Instagram, YouTube, and LinkedIn pages. You can also sign up to receive Law Matters, Offit Kurman’s monthly newsletter covering a diverse selection of legal and corporate thought leadership content.
MARYLAND | PENNSYLVANIA | VIRGINIA| NEW JERSEY | NEW YORK | DELAWARE | WASHINGTON, DC